The Parliament supported draft laws #5118 and #5119, which were developed with the participation of BRDO (Better Regulation Delivery Office) experts, on simplifying doing business in the brewing industry.
Today, the craft beer market share is only 3% of the total volume produced in Ukraine. This figure could be much higher, but excessive state regulation hinders the development of small breweries. In turn, quarantine restrictions also negatively affected the industry.
Legislative restrictions for small brewers allow producing no more than 300 thousand liters per year. That means that a wholesale license’s cost is UAH 30 thousand, and in case of exceeding the specified amount — UAH 500 thousand.
At the same time, the generally accepted European beer production volume for small breweries is 20 million liters per year, and this, in particular, allows such breweries to pay a reduced excise duty, which is 50% less than the national excise rate.
What do the draft laws #5118 and #5119 propose?
- increasing the maximum production volume allowed to 20 million liters per year for small beer producers;
- reducing the excise beer production duty by 50% of the national excise rate for small beer producers;
- canceling the wholesale license for small beer producers;
- introducing perpetual license for beer production and differentiating differentiate fines depending on the annual production volume;
In the process of drafting the laws, BRDO experts conducted analytical market research, public consultations with business representatives, as well as studied the international experience of regulating the beer industry and Ukraine’s European integration commitments in this area.
Over the past 10 years, the beer market has decreased by 42%, and in 2019, its production volume amounted to 185 million decaliters, in particular, through the introduction of licensing for selling beer drinks; reduction of the income level of the population; increase in raw material prices. One of the urgent problems of the industry was the difficulties of craft beer producers.
That is why the proposed regulatory solutions are aimed at simplifying the business environment for small beer producers, implementing Council Directive 92/83/EEC on the harmonization of the structures of excise duties on alcohol and alcoholic beverages by setting a production limit of 200,000 hectoliters of beer per year for small beer producers and introducing a differentiated approach to the excise duty payment.