Business slightly worsened the assessment of Ukraine’s tax system
This is evidenced by the results of the Tax Index survey, conducted regularly by the European Business Association among the experts from its member companies. The new wave of survey over the period from April through October 2019 shows some deterioration of the experts’ mood – the index reached 2.90 points out of 5 possible, compared to 2.98 points in the previous period. Thus, the Index has remained in the negative plane throughout the whole history of the study since 2011.
Entrepreneurs had the best feelings about the state of the tax system in late 2018 – early 2019. Now, one can see certain deteriorations in the respondents’ assessments, which influenced the decrease of the integral result. Thus, the share of dissatisfied with the tax legislation increased – 26%, while in the previous period it was 23%. Another 59% of experts consider the quality of tax legislation in Ukraine satisfactory.
The number of respondents who answered affirmatively to the question of whether the current tax regime contributed to their business slightly reduced – 64%, compared to 68% in the previous period.
Only 18% of experts evaluated the tax reporting and tax administration process positively, while 33% found the process burdensome. The experts pointed out the main factors that hurt tax reporting and administration, in order of priority for the respondents:
- The amount of time spent preparing tax reports and paying taxes;
- Misunderstandings of the rules and clarifications regarding tax reporting and payments;
- Imperfect electronic reporting system;
- The rapid implementation of new rules and the lack of time to adapt to them;
- The number of payments.
During this period, tangible manifestations of fiscal pressure were felt by 28% of respondents, which almost repeats the result in the previous period. 29% reported that the pressure was almost absent and another 9% of experts did not encounter it during the survey period. In the previous period, the number was 18%, so we can see that the number of such companies has halved today.
Among the pressure methods that are still being observed, the business named the following:
- Unjustified information requests;
- Unjustified interpretations of tax legislation by control bodies and their rejection of counterarguments/explanations;
- Biased decisions by fiscal authorities;
- Technical problems with the server when submitting electronic reports and registering VAT invoices.
The results of the survey showed that the number of dissatisfied with the quality of tax services increased slightly – 29% (in the previous period – 24%). At the same time, 33% of respondents said they were satisfied with the quality of tax services, and another 38% indicated a satisfactory level of service.
The consideration by the Verkhovna Rada of ambiguous tax initiatives, together with the plans of their almost immediate implementation, undoubtedly became stressful for entrepreneurs, which affected the assessment of cooperation between the state and business in the tax sphere. Traditionally, businesses lack the time to innovate and adapt to change, even more in the case of large-scale change.
For your information:
During the calculations, traditionally 4 criteria have been taken into account:
- The quality of tax legislation;
- Complication/easiness of the tax administration;
- Fiscal pressure;
- The quality of the fiscal services.
The overall value of the Tax Index is the integrity of an average value calculation of each of the aforementioned factors. Overall, 105 experts from the Tax Committee of the Association have been surveyed.
Research partner – Gemius