Ukrainian agriculture: Shadow rents in tens of billions UAH

The Association of Agrarians of Ukraine (AAU) appealed to the Minister of Agriculture of Ukraine Mr. Roman Leshchenko to support solving the problem of “shadow farmers” in Ukraine.

It’s not a secret that the problem of the shadow economy is a key obstacle to the economic and democratic stability in our country. According to the conclusions of expert research from the ICET and CASE analytical centers, the volume of shadow lease of agricultural land ranged from 19 billion to 69 billion UAH in 2019 in Ukraine. At the same time, budget losses reached from 6 billion to 22 billion UAH per year from shortfalls of personal income tax, unified social tax, a single tax of the 4th group (or corporate income tax).

According to EOS Crop Monitoring, almost every tenth hectare of Ukrainian agricultural land is in the shadow. In the official appeal, the AAU describes a specific case that happened to a member of the Association in the Kirovograd region. The company lost the right to lease 100 hectares under very unpleasant circumstances – “shadow farmers” signed lease agreements for land plots with rent 2-3 times lower than the market price (obviously the difference was paid unofficially in cash to the landowners, and “shadow farmers” got the opportunity to evade taxes). There are also cases when land is cultivated without a lease agreement at all, as a result, taxes are not transferred to the state budget at all.

The AAU called to action the newly created Ministry of Agriculture and the new Minister Roman Leshchenko to pay special attention to this problem and proposed to initiate an automatic audit of cases when after changing the tenant of the land plot the rent is reduced or the rent of the lease agreement is set below market.

The Chairman of the AAU, Mr. Alexander Vasilivsky, commented: “We hope for an active position of the Ministry in solving strategic issues for the industry – the issue of “shadow farmers”, informal cash payments, unfair competition. From our side, we assure that all members of our Association pay taxes in good faith and comply with the laws of Ukraine, and in conditions of fair competition are ready to continue to work and develop the agricultural sector by attracting national and foreign investments.”


(Illustration by Case Ukraine “Tax evasion in Ukraine: the main sources of losses of the state budget.” Source: byudzhetu / )