Loggers request not to cancel VAT return for log exports

Top managers of Lesnoy Soyuz partnership and the Chamber of Commerce sent a letter to Prime Minister Dmitry Medvedev with the request to save the current procedure for VAT refunds to exporters of logs, as “Russian Forestry News” reports. The letter was a response to the initiative of the Ministry of Finance of Russia, which came out with the proposal not to reimburse VAT or to recover only a small part of it. In the appeal to Dmitry Medvedev it is said that the proposal of the Ministry of Finance will lead to increasing number of unprofitable enterprises and a sharp decrease in revenues to the budget.

General Director of Cherepovetsles holding (Vologda region) Valery Pisarev asserts that in case of refund cancellation the company will lose 100-150 roubles per each cubic metre of roundwood going for exports.

“For a raw material business that has low margin, at the level of 5%, it is a very serious loss”, said CEO of Metsa Forest Podporozhye (Leningrad region) Vyacheslav Kanatov. “This is a very heavy burden, which lies primarily for bona fide businessmen who have been working transparently and not trying to capitalize on VAT”. The enterprise processes some volume in the Leningrad region and transports another part to Finland, so the Finnish party treats the initiative of the Russian authorities as a disguised barrier duty.

“If these measures are implemented, it is likely that this would lead to reduction in investment and decline in business activity in Russia”, as Kanatov transmits opinion of the Finnish head organization. According to him, the North-West is traditionally oriented to the close relations with the Scandinavian countries, and birch and aspen pulpwood are mainly exported, as they do not have enough sales markets in Russia. According to Kanatov, the adoption of this law is lobbied by representatives of the pulp and paper industry who want to buy the raw materials for a pittance.

“For us, all that can halt the flow of raw wood abroad is a benefit”, recognizes GR Director of Arkhangelsk PPM Natalia Pinyagina. “We have to collect wood resources from the whole North-West. Therefore, we cannot but welcome all decisions of the government of the Russian Federation aimed at halting exports of round timber”.