Unreceived VAT refund is a significant risk in times of war – Metinvest CFO

Unreceived VAT refunds in times of war are a significant risk because they affect the company’s working capital. Yulia Dankova, Chief Financial Officer of Metinvest Group, spoke about this issue at the XXII Annual Forum of CFOs of Ukraine.

According to her, the well-established system of automatic VAT refunds has stopped developing, when instead of punishing unscrupulous companies, end exporters are deprived of refunds.

“The company registers its VAT, the refunding exporter receives it, and all legally registered declarations are reflected in its reporting. But it does not receive a refund, because the company that registered the tax credit becomes a risky counterparty. And the state does not fight it, but simply cancels the refund,” she explained.

Dankova added that for Metinvest, the amount of VAT refunds is comparable to the payroll of all Ukrainian employees.

Metinvest’s CFO also commented on the consequences of the “white business club law” for the group. After its adoption, the company was denied a VAT refund, citing sanctions, but the group’s companies are not subject to sanctions.

“If this is a law on white business, it should support white business. If it is a sanctions ban, it should be directed at the target of the sanction, not deprive the company of refunds and leave it without working capital,” she said.

According to Yulia Dankova, such laws should encourage companies to become white, rather than force them to check their counterparties for risk.

Earlier, Metinvest’s CFO commented on the prospects of introducing new regulation of intra-group transactions in Ukraine. She believes that it would be wrong to introduce transfer pricing for transactions between Ukrainian residents and group companies.