Metinvest expects tax payments to increase to UAH 4 billion in Q1

Metinvest Group expects an increase in tax payments to the budgets of all levels of Ukraine in the first quarter of 2024 to more than UAH 4 billion, up from UAH 2.5 billion in January-March 2023. This was stated by the company’s CFO Yulia Dankova in an interview with dsnews.ua.

«Meanwhile, in Q1 2022, the Group paid UAH6.9 billion in taxes. However, we need to bear in mind that those contributions were based on the results of Q4 2021, which was a peak for steelmakers, and were effectively two months before the full-scale invasion. Therefore, in January-March this year, we expect to increase payments of all types of taxes compared with the same period in 2023.,» she added.

Yulia Dankova emphasized that the bulk of taxes are generated by the company’s facilities located in the frontline cities, including Metinvest Pokrovskvugillia.

At the same time, the Metinvest CFO believes that to make business more efficient during the war, key issues of Ukrainian taxation, including tax consolidation, tax duplication, etc., need to be addressed.

«In Ukraine, the possibility of introducing tax consolidation has been discussed for a long time. For some time, it was not in focus. But given the current realities, we believe that it is worth returning to this issue because it is a sound, civilised tax practice. For example, our US coal mining subsidiary United Coal consolidates taxes and reports for a common list of legal entities that are coal mining companies,» Dankova comments.

Tax duplication is also a significant problem for Ukrainian businesses. In particular, Metinvest’s mining and processing plants pay several types of taxes for one facility: environmental tax, land tax, waste disposal fee, subsoil tax and income tax.

«Although these are all supposedly different taxes, we are paying quite a lot for just one quarry. This does not seem fair to us, and we think that taxes are duplicated. Instead, we could direct this resource to investments that would create new jobs. This would also generate budget revenues in the form of import VAT and customs duties. This would increase our efficiency, which in turn would generate more income tax,» she said.

She also said that businesses have some problems with VAT refunds. Overall, the mechanism is working, but there are some important issues that are not being resolved: some of the company’s counterparties from whom services or goods are purchased are considered risky by the tax authorities, which prevents VAT refunds.

«Instead of targeting these risky taxpayers, tax authorities refuse to refund VAT to companies like ours that operate officially and transparently. Essentially, tax authorities are punishing us for the fact that our unscrupulous counterparties do not pay VAT to the budget. This practice has been in place for many years, not just the last two,» emphasized Metinvest’s CFO.

In the context of military operations, this problem is becoming even more important as it affects the company’s working capital.

«Ultimately, the government will see an increase in tax revenues if it resolves this issue. In addition, tax authorities will not divert as many resources that could be directed to more useful purposes,» summarizes Yulia Dankova.

As GMK Center reported earlier, Metinvest, including its associates and joint ventures, paid UAH 14.6 billion in taxes and duties to the budgets of all levels in Ukraine in 2023. The largest contributions included the unified social tax (UAH 3.3 billion), income tax (UAH 3.2 billion) and personal income tax (over UAH 3 billion).

In addition, since the start of the full-scale war, Metinvest has donated UAH 4.8 billion to help Ukraine and its citizens, including more than UAH 2.5 billion for the needs of the army as part of the Steel Front military initiative.