Land payments for extractive companies in Ukraine are a triple burden – Metinvest’s CFO

Land payments for extractive companies in Ukraine are a double or even triple burden. Yulia Dankova, Chief Financial Officer of Metinvest Group, reminded of this at the XXII Annual Forum of CFOs of Ukraine held in Kyiv.

She explained that all companies pay a rent payment for mining, an environmental payment for the disposal of excavated soil, and a payment for land at the site where mining is carried out. Thus, companies pay three taxes for one plot of land. In addition, land fees in Ukraine are higher than in neighboring Poland.

At the same time, she noted that the provision on rent for iron ore mining in the Tax Code is quite transparent. The only unresolved issue is the additional costs incurred by the country’s enterprises. The tax is calculated on the basis of ore prices in China, and Ukrainian companies have to pay for so-called military logistics to deliver their products to this country.

As for the law on tax increase, in particular, the military tax rate from 1.5% to 5%, according to Yulia Dankova, it will primarily affect the income of individuals, and is not yet a burden on the corporate sector. However, she noted that the labor market will probably have to react to these changes in the future. Metinvest’s CFO does not rule out that businesses will have to raise salaries, especially in the face of staff shortages.

At the same time, Dankova believes that other ways should be sought to reduce state budget expenditures, for example, by cutting tax administration costs.

The Metinvest CFO believes that the introduction of a single fiscal unit model in Ukraine will make companies’ operations more transparent and reduce administration by several times.