The state budget may lose UAH 1.1 billion due to the minimization of fees for the use of subsoil – BES

Employees of the analytical and risk management department of the Bureau of Economic Security (BES) of Ukraine have identified several companies that have established a scheme to reduce fees for the use of subsoil for the extraction of minerals.

According to the press release, BES experts found that subsoil users, seeking to reduce the tax burden, used the prices of mineral sales for an interdependent economic entity, which were significantly lower than market prices, when calculating the tax liability for royalties.

Such actions allow systematic manipulation of the norms of the Tax Code of Ukraine and reduction of the size of rent payments. This, in turn, leads to budget losses due to unpaid fees for the use of subsoil, BES notes.

The potential risk of budget loss exceeds UAH 1.1 billion.

To eliminate this scheme, BES analysts prepared proposals for amendments to legislative acts and sent recommendations to the relevant committee of the Verkhovna Rada of Ukraine, the Ministry of Economy and the Ministry of Finance.

As a result, the parliament passed a law that sets minimum prices for the supply of commercial products from the mining sector, the press release concludes.