Belarus Will Reduce Shipments to Russia

Published online: Sep 10, 2007 staff report
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Belarus raises the value-added tax (VAT) rate on white sugar to 24 percent from 18 percent effective Sept. 1 but the Belarussian Economics Ministry says the increase will not lead to changes in fixed sugar prices. Belgospishcheprom, the Belarussian state food concern, initiated the VAT increase but would not comment on the reason. Analysts say the increase is intended to reduce the economic appeal of importing sugar from Russia because of Moscow's restrictions on imports of Belarussian sugar. Belarus has fixed sugar prices that are higher than Russian sugar prices, leading to increased imports from Russia cutting into the profits of Belarussian producers. Exports of Belarussian sugar to Russia attract a zero VAT rate. With the Belarussian sugarbeet harvest under way, the crop is estimated at four million tons. This will produce between 430,000 and 450,000 tons of sugar. The domestic market consumes 360,000-370,000 tons a year. Belarus has agreed to limit shipments of sugar to Russia to 180,000 tonnes this year and 100,000 tonnes next year. Belarus is a landlocked country in Eastern Europe which borders Russia to the east, Ukraine to the south, Poland to the west, and Lithuania and Latvia to the north.