The Cabinet of Ministers of Ukraine approved its Resolution No. 1082 dd. 27.12.2017, which approximates the laws of Ukraine in the pharmaceutical area to the EU legislation and took effect on 30 December 2017. The Resolution harmonized the norms of by-laws with the requirements of the Tax Code of Ukraine and finally resolved all conflict issues regarding the application of the zero excise duty on medicinal alcohol used for drug manufacturing, in particular, for export.
This decision is very important for Farmak JSC as a leader of the domestic pharmaceutical market in terms of pharmacy sales* and a large exporter, as the company supplies products to more than 20 countries of the world. Compliance with the European quality standards and adoption of the world’s best manufacturing practices is the basis of development of Farmak JSC.
Adoption of the Resolution in the current wording is a good example of balanced and proper problem solving. Therefore, Farmak JSC supports the actions of the Ukrainian Government aimed at elimination of conflicts in the legislation of Ukraine and solve existing problems in accordance with the best EU practices.
However, attention is drawn to the fact that bodies of the State Fiscal Service of Ukraine have delayed with the repayment of funds worth UAH 13.7 million unlawfully collected from the Farmak JSC, which must be repaid upon the adoption of the above Resolution.
Furthermore, the bodies of the State Fiscal Service have charged additional penalties for the alleged misuse of ethyl alcohol at the zero excise duty rate for the manufacture of exported medicines totaling UAH 5.25 million. However, given the requirements of the Tax Code of Ukraine and the CMU Resolution No. 1082 dd. 27.12.2017, these penalties are contrary to the applicable laws of Ukraine and the respective tax notices should be cancelled.
It should be emphasized that as at 01.02.2018, the administrative complaints filed by Farmak JSC concerning the said tax notices remain unconsidered by the State Fiscal Service of Ukraine and the respective tax notices remain uncancelled. At the same time, Farmak JSC is the only pharmaceutical company that entered the TOP 100 taxpayers of Ukraine for 2017. The amount of the company’s tax deductions in 2017 was UAH 526.5 million.
Farmak JSC urges the State Fiscal Service of Ukraine to adopt legal decisions, to cancel the improperly charged penalties and to repay the unlawfully collected funds in the amount of UAH 13.7 million.
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