Employees of the department of information analysis and risk management of the Bureau of Economic Security (BES) of Ukraine have exposed a number of companies that have established a scheme to minimize royalties for the use of subsoil for the extraction of minerals.

According to a press release, BES analysts have established that subsoil users, in order to reduce the amount of tax, used the prices of mineral sales to a related business entity when calculating the tax liability for royalties, which are significantly lower than market prices.

Such actions make it possible to systematically manipulate the norms of the Tax Code of Ukraine and minimize the amount of rent payments. This, in turn, leads to budget losses in the form of unpaid payments for subsoil use, BES notes.

The potential risk of budget losses is over UAH 1.1 billion.

To eliminate the scheme, BES analysts prepared proposals for amendments to the legislation and sent recommendations to the relevant committee of the Verkhovna Rada of Ukraine, the Ministry of Economy and the Ministry of Finance.

As a result, the parliament adopted a law that sets the minimum prices for the supply of commodity products of a mining enterprise, the press release summarizes.