World meat industry news

The Ministry of Industry and Trade considered the retail initiative to reduce VAT on the sale of socially significant products - meat, milk, bread, tea and bananas "deserving of attention". The ministry will study this proposal for large-scale trade, Izvestia was told in the department. At the end of June, the Association of Retail Companies proposed to the Federal Tax Service to give sellers a number of concessions so that chains could continue to contain rising food prices. So, AKORT asked to reduce VAT on some goods, to give a deferral for paying insurance premiums and paying taxes. How the potential tax cut will affect the cost of the most popular products and what negative consequences of such a step experts see - in the material of Izvestia.

The Ministry of Industry and Trade will consider the initiative of the Association of Retail Companies (AKORT, unites large retail chains) to reduce VAT on socially significant products, that is, meat, milk, bread, tea, and so on, plus bananas. The ministry is confident that the initiative "deserves attention." This was reported to Izvestia in the press service of the department.

At the end of June, AKORT suggested that the Federal Tax Service give sellers a number of indulgences in their work: this will allow chains to continue to contain rising food prices. Food inflation is rapidly increasing, for example, in early April it amounted to almost 20% in annual terms, retailers pointed out. The chains were asked to give them a deferral of a year to pay insurance premiums and taxes. By design, such concessions will allow the retailer to free up resources in order to maintain low prices for essential products and their wide range for longer.

- In general, the Ministry of Industry and Trade is in favor of market methods to contain prices. For example, we recommended retail chains and suppliers to move from the practice of procurement through tenders to direct long-term supply contracts, the press service of the ministry specified. “Moreover, tenders should be an additional tool for rapid replenishment of stocks during periods when consumer demand for these goods rises sharply.

The department stressed that the ministry's specialists monitor the situation with regard to prices and supplies on an ongoing basis, they hold meetings with associations of manufacturers, retail chains and regional authorities that oversee trade.

The Ministry of Industry and Trade added: according to AKORT, this year the largest retail chains voluntarily reduced the margin on socially important goods by three times - from 22 to 7%, and in some cases to 5%, although this does not even cover retail operating costs. In some cases, companies charge a negative premium. In order to support the industry, reduce the financial burden on networks and continue to keep low prices on a long-term basis, AKORT has proposed several support measures.

Izvestia sent a request to the Ministry of Finance. The FTS said they do not comment on this topic. ACORT provided no further comment.

Reduce to zero

A reduced VAT rate of 10% is already provided for most of the socially significant goods, Irina Fedoskina, FBK Legal's leading legal adviser, reminded Izvestia. Reducing the tax to zero will lead to lower retail prices, she is sure. And the deferral of payment of contributions and taxes will allow companies to replenish their working capital with “free money”.

— Retail stands at the top of the chain of movement of goods to the consumer. Therefore, in order to reduce prices, it is necessary, first of all, to support manufacturers, importers of goods that are not manufactured in the Russian Federation, as well as logistics and transport companies, the specialist added. - A general reduction in the VAT rate for certain goods will support not only retail, but also all entities that are involved in the production and movement of socially significant goods.

Now is the best time to solve problems in taxation, which directly affect prices in stores, the expert is sure. For example, retail chains still cannot recognize stolen goods as expenses in order to withdraw them from taxes. Networks transfer fees for them to the treasury as for sold ones.

“First, VAT should be reduced for food producers, because it is they who play a key role - they provide the population with food, covering at their own expense all the components of the growing cost,” Dmitry Leonov, deputy chairman of the board of the Rusprodsoyuz association, told Izvestia. - Today, many food industry enterprises are balancing on the verge of profitability, unlike retail chains.

Even if VAT for trade is reduced to 2-3%, this will affect the cost of products: retailers will have the opportunity to reduce the surcharge, Georgy Ostapkovich, director of the HSE Center for Market Research, confirmed. At the same time, companies will be able to increase their profitability, he stressed.

But it should be understood, the expert noted, that such a step will reduce deductions to the budget: VAT is one of the highest tax rates, and if revenues from this tax decrease, then the funds allocated for social programs, healthcare, and so on will decrease. Moreover, such a precedent will entail other consequences: enterprises in many other industries will also request a reduction in the tax burden.