Ukraine moves to plug hide export loophole
Hides supplies from the Ukraine can be expected to tighten following the government’s closure of a loophole that was used by many traders to export their hides duty free.
In its resolution of May 6, the Ukrainian parliament imposed an across-the-board export duty of 400 euros ($350) per ton of cow hide, 170 euros per ton of pork hide and 1 euro per individual sheep hide. The development means an end to the duty exemption for hides exported for higher-quality processing, and which was exploited by unscrupulous traders who would simply send the hides straight to their export customers. They would use falsified paperwork to prove that they had re-imported the processed hides – the net result being non-payment of duty.
Though the Ukrainian government had been aware of the practice for some time, its was prompted to take action by the upsurge in suspected cases, triggered by the European shortage situation.
Last year, export duty was paid on $14 million worth of hides. According to UkrLekhProm, however, a lobbying group acting on behalf of the Ukraine’s 15 to 20 tanneries, the ‘real’ figure was closer to $100 million, with most of the hides being sent to Europe in the manner described. The resultant domestic shortage of hides means tanneries are currently running at only 30% capacity, says UkrLekhProm.
Though the development has obviously been welcomed by UkrLekhProm, its effects might well be short lived. Continuing financing from The International Monetary Fund is conditional upon the country repealing a number of export duties – one of them being the duties that apply to hides. The same condition is attached to the country’s pending accession to the World Trade Organisation.
