Ferrexpo, a Swiss-headquartered iron ore company, warns of substantial economic and social consequences following the Ukrainian tax authorities' decision to suspend VAT refunds for January 2025 totaling approximately US$12.5 million.
The company will be forced to reduce its production capacity to just 25%, triggering a cascade of potential negative outcomes. These include risking thousands of jobs, drastically reducing tax revenues to the Poltava region and national budget, halting future investments, and diminishing local and national business procurement by 50%.
Executive Chairman Lucio Genovese emphasized the critical nature of monthly VAT refunds, stating that their suspension will significantly impact the business and its stakeholders. The company, which has been a major economic contributor during wartime, has historically supported Ukraine's economy by paying over US$150 million in salaries, US$1.8 billion to suppliers, and US$300 million in taxes and royalties.
The VAT refund suspension appears linked to personal sanctions against Kostiantyn Zhevago, though Ferrexpo argues these should not financially penalize the company, which is primarily owned by international investors.
The potential business contraction could have far-reaching implications for Horishni Plavni, a city of 50,000 people where every household depends on Ferrexpo's operations. Chief Operating Officer Viktor Lotous highlighted the community's vulnerability, including over 8,000 internally displaced people who rely on the company.
Ferrexpo is urging the Ministry of Finance and State Tax Service to restore VAT refunds and support the company's continued economic contribution during Ukraine's critical period.
