Kryvyi Rih, March 18, 2021. ArcelorMittal Kryvyi Rih is deeply concerned with the misleading statements by SBU Head Ivan Bakanov regarding the company’s tax payments. The company has already provided the full and correct information to Mr. Bakanov in a letter, citing the tax and duties payments we have made over the past six years. The management of ArcelorMittal Kryvyi Rih hopes that the statements, which media circulated on March 17 were a result of a misinformation of Mr. Bakanov by his subordinates.
As all other exporters in Ukraine, ArcelorMittal Kryvyi Rih is benefiting from a value added tax refund scheme provided by the Ukrainian law. The company applied for reimbursements of our own funds that were paid as VAT while importing goods and services or purchasing them locally. VAT refund does not envisage any additional state budget outlays and is simply reimbursing the company for extraneous funds paid to the state. This amount is calculated as the difference between taxes owed and the actual VAT paid to the customs agencies or in-country suppliers.
If this tax is paid in excess, the government reimburses these funds, according to the law. All Ukrainian enterprises that have pre-paid their VAT have de facto financed the state by providing a tax credit.
The government is still paying back VAT refunds owed to ArcelorMittal Kryvyi Rih for the years before 2015. At the moment, the state still owes the company roughly UAH 100 million.
Delays in refunding VAT and partial refunds by the government have led to postponements of capital investment programs and has a negative effect on the country’s investment climate as a whole.
Artem Filipyev, Chief Officer for Legal, GR, PR issues, ArcelorMittal Kryvyi Rih:
- As an international company, ArcelorMittal lays out its business processes according to strict rules set by the law. First of all, it is a full and timely payment of all taxes, including VAT, corporate income tax and rental tax. The law also provides for a VAT refund mechanism that applies equally to all Ukrainian businesses, particularly, exporters. Should the government intervene in this process, as was the usual practice prior to 2015, not only will it violate its own law, but also will clamp down on capital investments and reducing exports. In its turn, this will reduce the amount of foreign currency revenues to the country. With statements like this, do the law enforcers even realize what they are pushing the investors to do?
ArcelorMittal Kryvyi Rih stated and actual VAT refunds 2015-2020 (thousands, UAH):
| Applied for | Actually refunded (including amounts owed in previous years) |
Total tax payments | |
| 2015 | 6 331 684 | 5 872 415 | 8 644 757, 568 |
| 2016 | 6 846 135 | 8 029 169 | 6 328 994, 236 |
| 2017 | 6 859 817 | 6 108 800 | 7 681 754, 650 |
| 2018 | 6 990 349 | 5 862 580 | 8 828 213, 072 |
| 2019 | 8 026 641 | 8 340 130 | 8 639 729, 248 |
| 2020 | 5 425 495 | 6 221 953 | 6 174 125,395 |
| Total: | 40 480 121 | 40 435 047 | 46 297 574,169 |
