Tax authorities stopped Ferrexpo’s VAT due to sanctions against Zhevago. Business forced to cut production
21 March 21:15
Swiss company Ferrexpo has received a notice from the Ukrainian tax authorities about the decision to suspend VAT refunds for January 2025 in the amount of 512.9m hryvnias (approximately 12.5m dollars). This is stated in a letter accessed by Komersant ukrainskyi.
In the notice, the tax authorities note that the suspension of VAT refunds is due to the imposition of personal sanctions against Konstantin Zhevago.
The company insists that these sanctions are personal to Mr. Zhevago and they were not imposed directly on the company.
“Ferrexpo believes that personal sanctions against Konstantin Zhevago should not be used to exert financial pressure on the company, especially when the majority of Ferrexpo’s voting shares are owned by international investors, including some of the largest global banks, investment, pension and sovereign wealth funds,” the business said.
Earlier this week, Ferrexpo announced that a $72 million write-down in the value of its operating assets was required due to lower projected cash flows. The company has a loss of US$50 million in 2024 due to high costs and lower prices for its products.
The company said that the suspension of VAT refunds puts additional financial pressure on Ferrexpo.
“This means that the company is forced to reduce production and sales. These actions are damaging and complicate the situation as the company is already operating in difficult conditions. Ferrexpo calls on the Ministry of Finance and the State Tax Service of Ukraine to take urgent and effective measures to restore VAT refunds and not jeopardize people’s livelihoods, fiscal and social contributions during this critical period in Ukraine’s history,” the company said in a statement.
What is known about Ferrexpo
Ferrexpo is one of the key companies in the mining and metals sector, specializing in the production of iron ore pellets. It is Swiss-registered, but its main assets – notably the Poltava, Yeristovskiy and Belanovskiy mining and processing plants – are located in Ukraine.
History and ownership structure
Ferrexpo was established back in the Soviet era as Poltava Mining and Processing Company. In 2007, it went public on the London Stock Exchange. The main shareholder of the company is Konstantin Zhevago, who owns more than half of its shares. He is now under investigation and was detained in France in 2022 on charges of economic crimes in Ukraine.
Company activities
Ferrexpo is one of the world’s leading exporters of iron ore pellets. It has been supplying raw materials for steel production to European countries for more than half a century. However, the company has recently faced serious challenges – in particular, financial losses amid war, declining ore prices and the difficult economic situation in Ukraine.
In February 2025, the Ukrainian authorities announced plans to partially nationalize Poltava GOK, Ferrexpo’s largest asset. It is about the transfer of 49.5% of shares to the state. The reason was suspicions of financial irregularities and environmental damage. The total amount of the state’s claims against the company is more than 150 billion hryvnias. Ferrexpo rejects these accusations.
Read also: Double blow for “Ferrexpo”: a lawsuit for UAH 157 billion and a fall in shares
Sanctions against Konstantin Zhevago: what you need to know about them
Konstantin Zhevago is one of the most famous representatives of Ukrainian business, owner of Ferrexpo group and former deputy of the Verkhovna Rada. In 2025 a new round of political and economic confrontation broke out around Zhevago.
National Security Council sanctions
In February 2025, the National Security and Defense Council of Ukraine added Zhevago to the sanctions list. The sanctions were explained by “systemic interaction with the economy of the aggressor country” and “risks to national security.” The sanctions are indefinite and include a full arsenal of restrictions: blocking of assets, ban on any trade and financial transactions, as well as freezing of corporate rights.
Argumentation of the authorities
The authorities are convinced that despite declarations of patriotism, Zhevago’s business had close ties with Russia and pro-Russian structures in the past. Among the arguments are the activities of Ferrexpo group in the “pre-occupation” period, as well as contacts with a number of Russian traders and banks. The NSDC also refers to the criminal case of withdrawal of more than $100m from the bankrupt Finance and Credit Bank, which was owned by Zhevago. In this case, the investigation is certain that the funds were withdrawn through fictitious loans, and their return to the state remains in great doubt.
Zhevago’s own reaction
The businessman has strongly criticized the Ukrainian authorities. He claims that he has become a victim of political pressure and a “planned attack” on a successful business. Zhevago claims that:
- does not have a single operating asset in russia;
- never cooperated with the occupation structures;
- he has helped the AFU since the beginning of the war and has been under russian sanctions.
He also drew attention to the fact that Ferrexpo is a public company listed on the London Stock Exchange, where 75% of shares are in the hands of international investors – major Western banks and funds. According to him, the actions of the National Security and Defense Council hit not only him, but also Ukraine’s investment reputation.
Zhevago may try to challenge the sanctions in courts, including international ones. However, it is still unclear how quickly and how effectively such mechanisms will work.
The sanctions against Zhevago are part of a broader campaign by the Ukrainian government to “revitalize” the economy – getting rid of business entities suspected of collaborating with the enemy or engaging in non-transparent activities. This coincides with increased control over big capital, especially in the wake of scandals involving other oligarchs.
