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Business urges to implement agreements reached during the discussion of the draft law №1210-1

03/ 10/ 2019

There is an active discussion of the draft laws № 1210 and 1210-1, as well as 1209 and 1209-1 on the amendments to the Tax Code of Ukraine and other laws. It is worth to mention that the draft law № 1210-1 should be considered by the Verkhovna Rada in the first reading on October, 4.

The European Business Association welcomes the efforts of the authorities aimed at modernizing tax rules by, inter alia, implementing international experience.

The EBA provides proposals on the draft laws 1210 and 1210-1, actively participates in the Working Groups of the Verkhovna Rada Committee on Finance, Tax and Customs Policy, created in order to discuss the most problematic areas, such as:

  • checks, statutes of limitations, liability of payers;
  • responsibility of tax officials, fines;
  • controlled foreign companies, exchange differences, “constructive” dividends and thin capitalization;
  • increase rent for iron ore;
  • abolition of stimulating rents for the extraction of natural gas.

It should be noted that propositions from business were partially took into account in the draft law № 1210-1. There is also a significant number of proposals regarding which was reached an agreement during the working group to include them to the draft law, although they were not included in the document. Therefore, the Association notes the importance of consideration of all compromise agreements between the first and second readings.

In addition, some discussions are still ongoing in the VR working groups and the European Business Association hopes to achieve balanced, acceptable solutions.

So, for example, the dialogue regarding penalties for violation of the deadlines for registering VAT tax invoices that are not provided to the recipient or regarding the excise tax on fuel. There is also ongoing discussion regarding a significant increase of tax burden on some industries, for example, mining and metallurgical complex, tobacco industry, etc.

Unfortunately, the stimulating annuity for natural gas is still under threat, the abolition of which means a violation by the state of a stabilization warning regarding the invariance of annuity rates for new wells during 5 years. This can lead to the curtailment of drilling programs by companies, which, accordingly, will reduce production volumes and have irreversible negative consequences for the gas industry and the country’s non-volatility.

The EBA once again emphasizes that business supports the intention to initiate tax reform in spring 2020 and introduce the necessary legislative changes in 2021, which corresponds with the principle of stability of tax legislation.

At the same time, business community hopes that tax innovations will be based on compromise solutions and discussed with business. We urge to pay attention to the comments to the draft laws № 1210-1 and № 1209-1 and to modify them qualitatively in order to ensure equal and fair rules of game for everyone.

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