Business urges to prevent further deepening of the crisis in the country

02/ 10/ 2020

In mid-September, the Verkhovna Rada registered a draft law №4101, which provides for an increase in the tax burden on business, as noted, in the interests of the State Budget-2021. Thus, the document proposes to make amendments to the Tax Code regarding the rules on environmental tax, rent, excise, etc. Anna Derevyanko. EBA Executive Director. Given the crisis, the decision to increase the tax burden on business looks, to put it mildly, strange. While most countries are helping and supporting their business communities, it seems that our entrepreneurs are being pushed to a dead end. I really want the state to be in tune with the business, without trying to strangle the latter during the crisis. In order not to harm the development of the country, the fiscal policy should always be guided by common sense, especially in difficult times of crisis. Thus, it should be based on a realistically formed expenditure part of the state budget of Ukraine. Besides, the fiscal policy shall ensure the implementation of impartial control over compliance with adequate tax rules. It is absolutely unacceptable for the state representatives to ignore the hardship in which a significant part of entrepreneurs found themselves. The desire of government officials to obtain as much tax as possible from businesses at any cost by imposing onerous restrictions, raising tax rates, or expanding the tax base, while ignoring the principles of stability of tax legislation, impedes the sustainable development of the country. Thus, the business community has concerns regarding the following aspects of this draft law: Restricting the right to transfer tax losses of the last 5 years, starting with the losses dated from 2016. Prohibiting the reduction of the corporate income tax base by the amount of interest in favor of non-residents until their actual payment. Introducing the taxation of non-resident remuneration received for the provision of brokerage, commission, or agency services, if such services are provided outside Ukraine. Establishing an obligation for asset management companies to prepare and file a return on income tax and financial statements for each collective investment institution that is under its management and is not a legal entity. Providing the supervisory authorities with the right to receive information on the status of taxpayers accounts, cash flows, etc. - if there is a decision to collect funds to repay the tax debt. Simplifying the procedure for collection of tax debt, which arose as a result of non-payment of commitments and / or penalties, which are determined by the taxpayer – in an out-of-court manner, regardless of the amount of debt and the duration of the delay. Abolishing the moratorium on inspections for the period of quarantine. Increasing excise tax rates on alcoholic beverages by 11.6%. There is no mechanism for paying excise tax on liquids used in e-cigarettes until the procedure for their labeling is fully operational. Increasing eco-tax rates by 11.6% for air emissions of pollutants from stationary sources, increasing the tax for carbon dioxide emissions from stationary sources by 3 times (from UAH 10 / ton to UAH 30 / ton) in stages until 2024, increasing the tax for discharges of individual pollutants in water bodies by 2 times, gradually increasing it by 10 times until 2029. Increasing the transport tax base for both individuals and legal entities. The tax is set at UAH 25,000 per year for all cars not older than 5 years and worth more than 40 thousand dollars. The European Business Association calls for refraining from an increased fiscal burden on businesses and citizens to restore the countrys economic stability and prosperity as soon as possible. Otherwise, the losses for the business will be even more painful, and some companies will probably be forced to shut down altogether. So, hopefully, the artificial deepening of the crisis will not happen. Be the first to learn about the latest EBA news with our Telegram-channel – EBAUkraine.

Anna Derevyanko EBA Executive Director

Given the crisis, the decision to increase the tax burden on business looks, to put it mildly, strange. While most countries are helping and supporting their business communities, it seems that our entrepreneurs are being pushed to a dead end. I really want the state to be in tune with the business, without trying to strangle the latter during the crisis.

In order not to harm the development of the country, the fiscal policy should always be guided by common sense, especially in difficult times of crisis. Thus, it should be based on a realistically formed expenditure part of the state budget of Ukraine. Besides, the fiscal policy shall ensure the implementation of impartial control over compliance with adequate tax rules.

It is absolutely unacceptable for the state representatives to ignore the hardship in which a significant part of entrepreneurs found themselves. The desire of government officials to obtain as much tax as possible from businesses at any cost by imposing onerous restrictions, raising tax rates, or expanding the tax base, while ignoring the principles of stability of tax legislation, impedes the sustainable development of the country.

Thus, the business community has concerns regarding the following aspects of this draft law:

Restricting the right to transfer tax losses of the last 5 years, starting with the losses dated from 2016.
Prohibiting the reduction of the corporate income tax base by the amount of interest in favor of non-residents until their actual payment.
Introducing the taxation of non-resident remuneration received for the provision of brokerage, commission, or agency services, if such services are provided outside Ukraine.
Establishing an obligation for asset management companies to prepare and file a return on income tax and financial statements for each collective investment institution that is under its management and is not a legal entity.
Providing the supervisory authorities with the right to receive information on the status of taxpayers’ accounts, cash flows, etc. – if there is a decision to collect funds to repay the tax debt.
Simplifying the procedure for collection of tax debt, which arose as a result of non-payment of commitments and / or penalties, which are determined by the taxpayer – in an out-of-court manner, regardless of the amount of debt and the duration of the delay.
Abolishing the moratorium on inspections for the period of quarantine.
Increasing excise tax rates on alcoholic beverages by 11.6%.
There is no mechanism for paying excise tax on liquids used in e-cigarettes until the procedure for their labeling is fully operational.
Increasing eco-tax rates by 11.6% for air emissions of pollutants from stationary sources, increasing the tax for carbon dioxide emissions from stationary sources by 3 times (from UAH 10 / ton to UAH 30 / ton) in stages until 2024, increasing the tax for discharges of individual pollutants in water bodies by 2 times, gradually increasing it by 10 times until 2029.
Increasing the transport tax base for both individuals and legal entities. The tax is set at UAH 25,000 per year for all cars not older than 5 years and worth more than 40 thousand dollars.

The European Business Association calls for refraining from an increased fiscal burden on businesses and citizens to restore the country’s economic stability and prosperity as soon as possible. Otherwise, the losses for the business will be even more painful, and some companies will probably be forced to shut down altogether. So, hopefully, the artificial deepening of the crisis will not happen.

Be the first to learn about the latest EBA news with our Telegram-channel – EBAUkraine.