OREANDA-NEWS. October 29, 2009. The specialists of the Union of Sugar Producers of Moldova considers that 8-percent VAT rate on sugar in Moldova is one of its competitive advantages before the Ukrainian sugar (in Ukraine this product are subject to 20% VAT, whereas, for example, in Russia it made 10% and in European Union - 6%, respectively).

On the other hand, this VAT size provides an acceptable level of prices for sugar for the Moldovan consumers. "The increase in VAT on sugar in Moldova will automatically lead to the increase in its price. In this case, the profitability of sugar smuggling from the Ukraine will increase”-, the statement of the Union of Sugar Producers of Moldova says. Thus, the sugar producers will be forced to reduce the purchasing price for the sugar beet, which will exacerbate the extremely difficult situation in the branch.

Sugar producers believe that raising VAT on sugar would reduce the area of cultivation of the sugar beet and will lead to disappearance of this crop from the agrarian sector. The statement notes that since 2007 and till now the sugar beet and other agricultural products is subject to 20% VAT which is returned to the agro-households from the budgetary subsidizing fund. If this practice is abolished, the sugar beet production in Moldova will be uncompetitive, taking into account the fact that in the other countries of the region sugar-beet growers receive substantial subsidies: US 167/ha in Ukraine, US195/ha in Belarus, and at least US 88/ha in Russia.

In the context of absence of subsidies to agricultural producers the reduction in VAT on beet up to 8% can be a good solution to the farmers. The members of the sugar beet complex of Moldova expressed hope that the authorities will have the political will and will not allow liquidating sugar beet industry and sugar production in the country. Now there are 4 sugar mills in Moldova. Annual turnover of the sugar industry is about 1,3 billion leis.