According to the Ukrainian association of metal producers Metallurgprom, Ukraine's debts for VAT reimbursements to domestic steelmakers has reached the amount of UAH 7.9 billion ($1 billion) and continue to affect the producers' financial results.
According to Fitch Ratings, the state's delay in refunding VAT paid on exported steel products in effect deprives producers of working capital. "There is also some evidence that the processing of VAT refunds is being applied on a selective basis with the foreign-owned ArcelorMittal Kriviy Rih understood to be owed in excess of $300 million," Fitch states.
"Our company is represented in many countries of the world and in some of them the economic situation is harder than in Ukraine. However, only here we are forced to face a problem when the government does not return the money we have earned...Actually, the un-refunded VAT is the sum of our investments for a year and a half. As a result, investments are postponed for a year and a half, which hampers development of the entire region," ArcelorMittal's executive vice president CEO Africa and CIS Arnaud Poupart-Lafarge stated, as reported by local Ukrainian media.
Meanwhile, the Ukrainian government intends to convert outstanding overdue VAT balances into government bonds with a coupon interest rate of 5.5 percent per annum paid twice a year in the amount of 10 percent of the bonds' nominal value.