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Resource bill 5600 was amended so that oligarchs will pay even less for ore

Financial-industrial groups will pay even less for ore due to amendments in 5600—CES analysis. Image Credit Flickr

Financial-industrial groups will pay even less for ore due to amendments in 5600—CES analysis. Image Credit Flickr

The resource bill 5600 was amended between readings so that now, according to its provisions, the oligarchs will pay for ore even less than before. Yuri Gaidai, Senior Economist of the Center for Economic Strategies, announced such conclusions.

According to him, now ore miners, including companies owned by Rinat Akhmetov, Kostyantyn Zhevago, and Lakshmi Mittal, pay $3 per ton of ore regardless of world prices (11-12% of the crude ore prime cost).

In spring, the Cabinet of Ministers voiced a proposal to amend the accrual method and change the rate depending on the price (that is, if the price is $85-$120, the rate will be 8%; if more than $180—16%).

Meanwhile, during the first reading of the resource bill 5600, the rates were envisaged at the level of 3.5%, provided that the price is up to $100, 5%—up to $200, and 10%—more than $200. By the second reading, the accrual base changed once again—two components were expelled from it.

The following components disappeared:

  • the price of freight from Ukraine to China—this is about $15-$ 20;
  • internal logistics—$10.

At the same time, prices on the ore market plummeted from $200 in May this year to $100 per ton.

"How much, according to this version of 5600, and under such conditions, will the ore miners pay on the market? Let’s count: $95 — $15 — $10 = $ 70 (price in the port of China, minimum freight, and internal logistics). $70 * 3.5% = $2.45 per 1 ton of ore—this is even less than the current $3," Gaidai noted in his explanation.

Context. On July 1, The Verkhovna Rada adopted the government bill No. 5600 as the basis, with amendments to the Tax Code and other laws. "The proposed changes will affect only business representatives, who for many years have become accustomed to being guided by the norms written specifically for them and for their enrichment," Serhiy Marchenko, Minister of Finance, said presenting the bill in Parliament.

On September 19, the Verkhovna Rada Committee on Finance, Tax and Customs Policy recommended to the Parliament to adopt the resource bill No. 5600 in the second reading.

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