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4 October 1999 77

GOVERNMENT EXEMPTS IMPORT OF SPARE PARTS FOR NUCLEAR REACTORS FROM 2% CUSTOMS TAX
GOVERNMENT IMPOSES LIMITS ON IMPORT OF SUGAR BY NATURAL PERSONS
GOVERNMENT WANTS TO IMPOSE 10% VAT ON FUEL BY 2001
GOVERNMENT LOWERS IMPORT DUTY RATES ON TEXTILE
PRESIDENT KUCHMA SIGNED CHANGES TO LAW ON 1999 BUDGET
UKRAINE MAY NOT GET IMF TRANCHE ON TIME, SAYS PRESIDENT KUCHMA

GOVERNMENT EXEMPTS IMPORT OF SPARE PARTS FOR NUCLEAR REACTORS FROM 2% CUSTOMS TAX
KYIV. Ukraine's government took a decision to cancel the 2% customs tax on the import of heat-releasing elements (cassettes), parts of nuclear reactors, gas generators, vapor generators and steel valves. This measure, in government's assessment, will help the industry to overcome the present decline. The 2% customs tax was levied by the government on May 19, 1999 for the period from July 1 till Dec.31, 1999. Revenue from this tax was earmarked to repay wage/pension arrears to budget-supported organizations, student scholarships and other social payments.
GOVERNMENT IMPOSES LIMITS ON IMPORT OF SUGAR BY NATURAL PERSONS
KYIV. Ukraine's government will allow all natural persons entering Ukraine to carry only 1 kg of sugar or saccharose, and up to 1 kg of other kinds of sugar, sugar syrups, lactose, glucose, fructose, artificial honey and caramel color.
GOVERNMENT WANTS TO IMPOSE 10% VAT ON FUEL BY 2001
KYIV. Ukraine's government submittted to parliament its draft changes to the law on VAT, proposing to impose a 10% VAT by Jan.1, 2001 on the sales of coal, coal and peat briquettes, electricity and imported natural gas - for all consumers, except those not registered as VAT payers. According to the government, the cancellation of the "0" VAT on fuel as of Jan.1, 2000 and the subsequent 20% VAT will make prices soar on fuel markets.
GOVERNMENT LOWERS IMPORT DUTY RATES ON TEXTILE
KYIV. The Cabinet of Ministers of Ukraine has issued a regulation by which it has lowered import duty rates on a number of light industry goods. This decision has been made in view of the fact that the introduction of higher import duty rates on textile and its raw materials in 1996-1998 has not led to an decrease in their import as most fabrics are imported as customer-supplied law materials and from the C.I.S. countries with no duty imposed on them. The Government is convinced that owing to this regulation Ukraine's foreign trade with the European Union will become more brisk and the supply of Ukrainian light industry companies with raw materials will improve. The EU states are ready to adequately open an access to their markets for Ukrainian textile. Under the regulation, preferential and full import duty rates worth 1% and 10% of customs value respectively have been introduced for silk and cotton waste, fine hair of some animals and cotton fiber; 1% and 5-15% rates have been introduced for various types of yarn, 1-5% and 20% on cotton and synthetic fabrics, 1-2% and 40% on binder twine, rope and cord. The regulation is dated by September 27 and will come into force 10 days after being published in Uriadovyi Kuryer (Governmental Courier).
PRESIDENT KUCHMA SIGNED CHANGES TO LAW ON 1999 BUDGET
KYIV. Sept.29, President Kuchma signed changes to the 1999 budget which parliament had approved June 29. The changes increase the number of "protected" budget items (i.e. expenditure which cannot be cut) on social programs and foresee the additional UAH 500 million to raise salaries to school teachers and UAH 450 million to finance rural social infrastructure. The changes also increased allocations for presidential election campaigning. Under the changes, the government will have to find the additional UAH 1.5 billion to finance the coal sector. Originally, President Kuchma vetoed the law, but lawmakers overrode his veto with 308 votes Sept.14. In his comments on the law submitted to parliament on July 19 Kuchma argued that the changes will jeopardise the budget implementation and destabilize the economic situation. The decision by lawmakers to increase the number of budget items earmarked for social programs and raise social payments will only cut the revenue and cause the budget disbalance, President Kuchma argued. President Kuchma strongly opposed that article of the new version of the law which demanded that the government stop issuing its guarantees for foreign credits obtained by Ukrainian entities. In L.Kuchma's assessment, this will curtail the country's export potential, stop the implementation of alternative domestic technologies aimed to cut imports and will eventually lead to fewer jobs in the ship-building, chemical, steel and petroleum industries. President Kuchma also disagreed with the proposed payment in the budget of a part of corporate profits by oil pipe-line companies which can be retained by the companies. This payment was enacted by parliament to replace the deductions from oil transit charges. The payment is to be exacted from the oil companies' gross profits and is counted toward their gross expenditure - which consequently qualifies the payment for VAT exemption. According to Mr. Kuchma, a norm which requires that 90% of central and local budgets' revenues as well as earnings from the sale of military equipment or leasing Ukrainian Armed Forces' property be directed towards the financing of the budget's 'protected items' must not be included in the law either. The President is also against canceling a norm under which all duties are placed in the account of the State Customs Service and all the settlements are carried out via the State Treasury. According to him, the cancelation of this norm will make it impossible for customs authorities to carry out the state budget revenues plan. The President pointed out that there were no grounds for the Supreme Council to increase, by UAH 25 million, budget expenditures on the presidential race next fall and decrease, by UAH 10 million, the financing of state TV and radio. The Parliament also decided to allocate UAH 442 million from the state budget for agri-industrial complex companies and organizations as compensation for their expenses on building social-cultural infrastructure units in villages. According to the President, this sum is UAH 342 million higher than the sum allocated for these purposes by the Government and such an increase in the sum is absolutely unrealistic.
UKRAINE MAY NOT GET IMF TRANCHE ON TIME, SAYS PRESIDENT KUCHMA
KYIV. Ukraine may not receive a tranche from the International Monetary Fund on time but this sum is not of huge importance for the country's economy, said Ukrainian President Leonid Kuchma at a news conference October 1. According to Mr. Kuchma, it is IMF's practice to suspend all its programs in any country one month before the election there and Ukraine is no exception. Ukraine was to receive the tranche within the EFF program in October, but on the last day of the month it holds the presidential election. Leonid Kuchma does not rule out the possibility that the IMF will explain the suspension of the tranche by the fact that Ukraine has introduced export duty on sunflower seed worth 23% of its customs value. The President has said that he is in favor of this decision as until now Ukrainian sunflower seed producing and processing companies have been losing up to US$ 100 million annually on account of the fact that part of this raw material has been exported. Mr. Kuchma added that in his opinion, the introduction of the export duty will help a new sunflower seed processing plant built by U.S. company Cargill in Donetsk oblast run more efficiently.

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