Ukraine's customs authority has raised the import duty on Lithuanian refrigerators to 25 percent, marking an about-face of the country's promises and dealing a significant blow to the company's hopes of breaking further into the 48 million market.
The customs authority's decision reportedly came as a result of President Viktor Yushchenko's failure to sign a law on the reduction of import duties levied on Snaige to 5 percent.
In response, the Lithuanian Embassy in Ukraine has issued statements to the Customs Authority of Ukraine and deputy prime minister, claiming that Kiev has breached the 2004 bilateral agreement setting the 5 percent import duty for the products of Snaige.
"We have lodged the complaint and believe that this misunderstanding will be solved soon," Kestutis Stankevicius, minister counselor at the embassy, said.
Failure to agree on the matter might prompt Lithuanian officials to send an official note to Brussels and ask the European Commission to represent Lithuania's interests in the dispute.
Ukraine applied a 10 percent import duty on Snaige's refrigerators beginning in April. However, the Ukrainian Customs Authority has notified its units of a rise in import duty levied on refrigerators of the Lithuanian company.
Giedrius Barysas, Snaige chairman, told the Baltic News Service that, according to the latest data available, Ukraine still levied duties as per earlier procedure. "We are refraining from any conclusions right now since we believe that the question will be solved soon," he said.
Snaige sells over 90 percent of its output in foreign markets, with Ukraine accounting for the largest share of exports.
The company posted 16.1 million litas (4.68 million euros) in consolidated pretax earnings for the first six months of 2005, a decline of 2.7 percent from the year-earlier figure. The group's sales, however, surged 20.3 percent, to 164.79 million litas, from 137 million litas in the January-to-June period of 2004.
