Extractive Industry Problems in Amalgamated Territorial Community Discussed in Poltava Region
03 April 2017

On 30 March, the Poltava Branch (PB) of the Social Service of Ukraine presented findings of the Report on Extractive Industries Transparency Initiative (EITI) in Ukraine for the years 2014-2015 to representatives of the Serhiivka Amalgamated Territorial Community (ATC) and mayors of neighboring villages in the Hadiach raion, Poltava oblast.

Hanna Kiiashchenko, head of the Social Service of Ukraine Poltava Branch, and a member of the Multi-Stakeholder Group (MSG) at the Ministry of Energy and Coal Industry, has explained to those present the reasons behind Ukraine’s implementation of EITI Standard and what will be its benefits to local communities.

The representatives of the local communities in whose jurisdictions hydrocarbons are extracted have noted that numerous companies are operating in their territories but the proceeds from the taxes paid by such companies never reach local budgets.

For instance, the personal income tax (PIT) paid by the oil and gas producing companies based in the jurisdiction of the Serhiivka Village Council are remitted to the Poltava budget, which is contrary to the current legislation. PIT is to be paid into respective local budget for placement of company’s own or leased premises/buildings in various regions of Ukraine, where employees of such economic company are working, irrespective of such economic company’s having no separate structural units.

In particular, the facilities of PAT Ukrnafta and PAT Ukrtransnafta companies are located in the jurisdiction of the Serhiivka ATC. There are about 1,500 employees working at those facilities but the local budget receives no PIT revenues from those operations.

The event was conducted as part of the USAID Municipal Finance Strengthening Initiative (MFSI-II) Rollout Project.