On 18 February 2021, the Ukrainian Parliament registered Draft Law No. 5104 “On Amendments to the Tax Code of Ukraine and Certain Other Laws of Ukraine on Improvement of Regulation of Insurance of Agricultural Products with State Support” (the “Draft Law”). According to an explanatory note, the main purpose of this Draft Law is to establish a mechanism allowing agricultural producers to access state support to insure agricultural products.
The Draft Law contemplates, among others, the following:
- the introduction of partial compensation of up to 60% of the insurance premium;
- the introduction of a state support mechanism for agricultural producers to insure agricultural products;
- an increase in the income tax rate applicable to agricultural insurance contracts to 3.5% and the further transfer of these funds to support the insurance of agricultural products;
- setting forth the participants of the insurance of agricultural products market with state support;
- a determination of the objects of insurance, insurance products, insurance risks, insured events, and requirements for insurance contracts with state support;
- a clarification of the powers of the relevant authorised agency exercising state supervision over insurance activities;
- the abolition of the provision on the insurance of agricultural products through the Agrarian Insurance Pool, which proved to be inefficient;
- the provision of information support related to the insurance of agricultural products with state support.
Currently, the exact time when the Ukrainian Parliament will adopt the Draft Law is unknown. At the same time, following the adoption of the Draft Law it is expected that the level of state support for agricultural producers in terms of insurance will be strengthened, which will have a positive impact on the Ukrainian agricultural sector.