Checking to Tax Persons in 2018
Natalia Ulyanova, Managing Partner at ICF Legal Service
We have been disinformed in the future? The budget for 2018, which was adopted by the Verkhovna Rada a few weeks ago, instead of the promised prime minister of economic growth and development may turn out to be a significant increase in the costs that will be covered by taxpayers.
Of course, at first glance, the state budget is wrapped in a beautiful “wrap” of important fundamental reforms. This is the strengthening of the country’s defense capability (only the Ministry of Defense and the Ministry of Internal Affairs will receive over UAH 152 billion), and the revival of medicine (the budget of the Ministry of Health in 2018 will amount to UAH 27 billion), and reforming education (Ministry of Education will receive UAH 31 billion), as well as pension systems (budget of the Ministry of Economic Policy for 2018 – UAH 150 billion, of which 139 – financing of the Pension Fund deficit). Approximately 40 billion USD will be spent on road repairs, and another 72 billion USD will be spent on utilities subsidies.
But the point is that the Ministry of Finance categorically refused to implement the new stage of the tax reform in 2017. And this means the 2018 state budget is “designed” at the current tax base. But at the same time, the task of the fiscal authorities – to increase tax revenues by more than 20%! As? The answer is obvious: by any means looking for reserves to replenish the budget.
The first “surprise” in January is waiting for small and medium business. Due to the increase of the minimum wage from UAH 3200 to UAH 3723, the payments from the personal income tax and the single social contribution for employers for employees will increase proportionally. Growth of the minimum wage will hit the entrepreneurs-upristschat. After all, the single tax paid by entrepreneurs of the first and second groups is tied to the minimum wage. It depends on it also that ESV, which pays the SPDSs. Thus, nominal PIT and ESV rates have not changed, the real fiscal burden will increase by about 16%. And still, employers should expect an increase in the number of labor inspections. Without them certainly will not do.
Another “gift for a Christmas tree” was put by deputies, suspending the operation of the mechanism of blocking VAT-invoices (bill number 6,776-d, adopted December 7). And, it seems, one needs to rejoice, because the imperfect system has been wiping out not so much money-makers for half a year as conscientious VAT payers. But, unfortunately, this measure is temporary, and in two months the block will be restored.
Of course, there is a ghostly hope that the Cabinet of Ministers, which should develop new criteria for termination of VAT invoices, will offer a “softer” option than the one that operated from July 2017. But, given that the 2018 budget envisages an increase in VAT revenues by 27%, there is very little faith in the fact that taxpayers will breathe easier. Even more, there is a risk that the system will eventually become virtually “manual”. Otherwise saying the State Fiscal Service will, at its discretion, make a decision to withdraw the block from separate operations within a day from the moment of their blocking. All others who did not fall into this list of “favorites” will pass the process of unblocking the standard procedure. By submitting supporting documents to the DPS commission.
As long as the business hopes to get from 2018 the tax on the withdrawn capital. Its introduction is actively “slowed down” by the Ministry of Finance, which fears that the abandonment of the income tax will lead to annual budget deficits of 40 billion UAH. And although President Poroshenko personally promised that the tax on withdrawn capital should clearly be in place from 2019, even the developers of the relevant bill so far do not give any forecasts. Too strong resistance from the Ministry of Finance and, partly, the DFS, which does not want to lose time-tested, effective leverage on business pressure. And in favor of the fact that the tax does not surrender, says the amount of income tax revenue in the budget of 2018 is UAH 82 billion, which is 22% more than the plan of 2017.
In the aforementioned draft law No. 6,776-d, an increase in excise taxes on tobacco products is set at 11.2% and an additional 16.7%, which will give rise to 29.7% increase in rates. This is entirely correlated with the fact that the revenue from excise taxes in 2018 should almost 10% exceed the amount of excise duty that will receive the budget for the results of this year. In addition, the acting DFS head Myroslav Prodan has repeatedly stated that the tax authorities intend to intensify the fight against smuggling and counterfeiting. And these measures, above all, relate precisely to excisable goods.
Innovations are waiting for individuals. The main news – new conditions for duty-free transportation of goods across the border of Ukraine. Ownership will now be able to import purchases of up to 50 euros. Provided that the resident was absent outside of our country no more than a day and entered Ukraine more often once in 72 hours. In addition, the number of packages that can be received free of charge from abroad by mail is limited to three per month at a cost of not more than 150 euros each. So if there is a desire or need to redeem more often and for bigger amounts – they will have to pay a fee. By the way, these requirements also echo the war on smuggling, announced by the DFS.
There is also the likelihood that the Finance Ministry and DFS will return to the idea of a one-time (“zero”) declaration for individuals. This is the main condition for launching a mechanism for controlling income taxpayers at their expense. The authorities did not refuse to implement the intentions of their introduction, so sooner or later, but Ukrainians will be forced to disclose all their earnings. And it is possible that this will happen already next year.
True, the government’s plans to increase tax pressure can spoil the IMF. The chief creditor of Ukraine criticized the budget for 2018 and stated that he would work with representatives of the Cabinet of Ministers to seek a balance between income and expenses. Therefore, it is possible that already in early 2018 the country’s main financial document will be sent to a repeat vote. But at the same time there are very high doubts that the Ministry of Finance and the DFS will review plans and agree to reduce the tax burden.
Source: Novoe Vremia