Astarta Holding NV, the biggest Ukrainian sugar producer traded in Warsaw, fell the most in more than a week as Ukraine’s government considers cutting tax preferences for its agriculture companies.
The shares declined 1.6 percent to 60 zloty at 12:02 p.m. in Warsaw. KSG Agro SA, a Kiev-based grain and sunflower seed producer, fell 2 percent to 12.55 zloty, while Industrial Milk Co., also based in the Ukrainian capital, lost 4.3 percent to 14.75 zloty. Warsaw’s WIGUKR Index of 11 companies from neigboring Ukraine declined 0.8 percent today.
Ukraine, which swung to a state budget deficit in the first two months of the year on higher spending, is considering an option to make local farms pay a 7 percent value-added tax, Income and Tax Minister Oleksandr Klymenko said at a press conference in Kiev yesterday.
“Agricultural companies should be able to partially offset the costs of the new tax by charging higher prices for their output,” Gergely Palffy, a Budapest-based analyst at KBC Securities, said in a note today. “Nevertheless, such news could put some pressure on Ukrainian agriculture stocks.”
Agricultural companies in Ukraine currently don’t pay VAT and spend the tax-related gains on investments, according to a note by Concorde Capital yesterday.