Seed distributors file for impending bankruptcy

Russian seed distributors may be charged additional VAT of 10% for the last three years. They expressed such concerns at a meeting on February 7 with Deputy Minister of Agriculture Oksana Lut, two participants told Vedomosti. The meeting was attended, in particular, by representatives of the National Union of Plant Breeders and Seed Growers (NUSiS), the Potato Union, and other organizations.

Seed growers are concerned about the different approaches to determining the size of the tax, one of the participants in the meeting explains. According to him, the seeds of wheat, corn, sugar beets, potatoes, open ground vegetables are included in the list of food products, the sale of which will be subject to a preferential VAT rate of 10% (instead of 20%).

At the end of 2019, the document was amended, allowing the exemption to be applied only if the product is used for food purposes. In 2020, the Federal Tax Service of Russia No. 1 for the Pskov Region additionally accrued 4.1 million rubles to the Prom company, since it applied a VAT rate of 10% when selling sunflower and corn seeds. “Prom”, in turn, tried to challenge this decision in the Arbitration Court of the Pskov region, but he sided with the tax authorities, pointing out that the seeds were treated with chemicals, which means that they cannot be eaten, are not food products and cannot be sold on preferential terms. In July 2022, this position was supported by the Supreme Court of Russia, and on January 13, 2023, the Tax Policy Department of the Ministry of Finance gave a similar explanation.