Efficiency of the execution of rental payments in Ukraine

V. Bashko

Economy and Forecasting, 2013, issue 1, 27-40

Abstract: Based on a comparison between the profitability indicators of mining and non-mining enterprises, the author makes a conclusion about the low efficiency of the execution of rental payments in Ukraine. Based on financial and tax reporting, the article establishes that the profitability of the mining enterprises considerably exceeds that of non-mining one, which is due to the low rates of rental payments for the extraction of minerals. As a result, in 2006-2011, the government did not receive about 50% of all revenues from natural rent or over 50 bln. Hrn. For more exact assessment of the volumes of generation and distribution of natural rent in Ukraine, the author analyzes the results of the companies' financial activities by the following three mineral types: iron ore, oil and natural gas. In particular, actual and reference asset profitability have been compared. In the definition of the actual profitability of the mining companies, the author takes into account the factor of considerable decline of all revenues from the sales of the above mentioned types of minerals. In the definition of reference profitability, the author considers the profitability of the assets of the non-mining enterprises, as well as the interest rates on deposits and credits. It is established that, in 2006-2011, total volume of the natural rent on the above mentioned types of minerals amounted to 221.7 bln. Hrn. Almost 27% of that sum was transferred to the budget receipts in the form of rental payment sand corporate tax on the super profits of the iron ore extracting companies. Over 85 bln. Hrn. was redistributed in favor of the house holds through the mechanism of the pricing for the natural gas supply for the population. The remaining 77 bln. Hrn. was left to the extractors and buyers of the produce of the mining enterprises, due to the inefficient mechanists of the execution of rental payments.

Date: 2013
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