Business met with Danylo Hetmantsev

26/ 04/ 2024

The European Business Association met with Danylo Hetmantsev, Chairman of the Verkhovna Rada Committee on Finance, Taxation and Customs Policy. In particular, they discussed the draft law on the white business club. Mr. Hetmantsev emphasized that the draft law No. 11084 was passed in the first reading yesterday. Now the work and preparation of the document for the second reading begins, so the community, including the EBA, has two weeks to submit amendments and proposals for the 2nd reading. Thus, currently, according to the document, the criteria for a business to be included in the above list are: tax burden (VAT and income tax - the companys data should be higher than the industry average), the average salary should also be higher than the industry and regional average, and the business should not have a tax debt. This list should be reviewed quarterly. Among the advantages for the company, if the business is included in this white list, it will receive a VAT refund within 5 days, no documentary checks will be conducted, the company will have a compliance manager from the tax office who will work with the company and help in communication with the tax office. The EBA representatives emphasized some skepticism about possible old methods of implementing new ideas by the unreformed tax service. Therefore, the EBA was invited to join the working group that will finalize the draft law for the second reading. In addition, the issue of CFCs (controlled foreign companies), the situation with the potential postponement of reporting deadlines, and the abolition of penalties for failure to fulfill the reporting obligation during martial law were raised. Mr. Hetmantsev said that the Ministry of Finance is currently preparing a relevant draft law (due in September), but there is a need to prevent the tax service from applying draconian financial sanctions to business. The draft law on which the business has already submitted proposals (No. 8137) seems unpromising. By the way, 7836 CFC reports have already been received (3408 from individuals and 236 from legal entities). At the same time, Mr. Hetmantsev confirmed his readiness to discuss the reduction of penalties in the context of reporting violations. Regarding the Diia City regime, the Committee Chairman confirmed that he expects the regime to be maintained. During the meeting, he also said that the Verkhovna Rada had adopted as a basis the draft law No. 9083, which exempts entrepreneurs engaged in the wholesale and retail trade of vehicles from re-registering used cars. At the same time, they discussed draft laws No. 10168-2 and No. 10169-2 (on improving the implementation of foreign economic operations for the export of certain goods, in particular, grains and oilseeds). Representatives of the EBA grain business community emphasized that, according to business estimates, the adoption of these draft laws in the current version could significantly complicate the work processes of all involved exporters and generally jeopardize the possibility of exporting Ukrainian agricultural products. Thus, experts of the EBA Grain and Oilseeds Committee warned that the physical blocking of exports could result in the collapse of the entire system of Ukrainian seaports. In addition, they discussed issues related to excisable goods (in particular, more clarity on the labeling procedure (where the excise stamp should be, etc.), the situation on the tobacco market, the possibility of using the cash method of calculating value-added tax for electricity producers under the market premium mechanism, etc. However, of course, other issues were also raised. So, we hope that all suggestions and comments from business will be heard!

The European Business Association met with Danylo Hetmantsev, Chairman of the Verkhovna Rada Committee on Finance, Taxation and Customs Policy.

In particular, they discussed the draft law on the “white business club”. Mr. Hetmantsev emphasized that the draft law No. 11084 was passed in the first reading yesterday. Now the work and preparation of the document for the second reading begins, so the community, including the EBA, has two weeks to submit amendments and proposals for the 2nd reading. Thus, currently, according to the document, the criteria for a business to be included in the above list are: tax burden (VAT and income tax – the company’s data should be higher than the industry average), the average salary should also be higher than the industry and regional average, and the business should not have a tax debt. This list should be reviewed quarterly. Among the advantages for the company, if the business is included in this “white list”, it will receive a VAT refund within 5 days, no documentary checks will be conducted, the company will have a compliance manager from the tax office who will work with the company and help in communication with the tax office. The EBA representatives emphasized some skepticism about possible old methods of implementing new ideas by the unreformed tax service. Therefore, the EBA was invited to join the working group that will finalize the draft law for the second reading.

In addition, the issue of CFCs (controlled foreign companies), the situation with the potential postponement of reporting deadlines, and the abolition of penalties for failure to fulfill the reporting obligation during martial law were raised. Mr. Hetmantsev said that the Ministry of Finance is currently preparing a relevant draft law (due in September), but there is a need to prevent the tax service from applying draconian financial sanctions to business. The draft law on which the business has already submitted proposals (No. 8137) seems unpromising.

By the way, 7836 CFC reports have already been received (3408 from individuals and 236 from legal entities). At the same time, Mr. Hetmantsev confirmed his readiness to discuss the reduction of penalties in the context of reporting violations.

Regarding the “Diia City” regime, the Committee Chairman confirmed that he expects the regime to be maintained.

During the meeting, he also said that the Verkhovna Rada had adopted as a basis the draft law No. 9083, which exempts entrepreneurs engaged in the wholesale and retail trade of vehicles from re-registering used cars.

At the same time, they discussed draft laws No. 10168-2 and No. 10169-2 (on improving the implementation of foreign economic operations for the export of certain goods, in particular, grains and oilseeds). Representatives of the EBA grain business community emphasized that, according to business estimates, the adoption of these draft laws in the current version could significantly complicate the work processes of all involved exporters and generally jeopardize the possibility of exporting Ukrainian agricultural products. Thus, experts of the EBA Grain and Oilseeds Committee warned that the physical blocking of exports could result in the collapse of the entire system of Ukrainian seaports.

In addition, they discussed issues related to excisable goods (in particular, more clarity on the labeling procedure (where the excise stamp should be, etc.), the situation on the tobacco market,

the possibility of using the cash method of calculating value-added tax for electricity producers under the market premium mechanism, etc.

However, of course, other issues were also raised. So, we hope that all suggestions and comments from business will be heard!