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Business met with the Minister of Finance of Ukraine

14/ 07/ 2021
    On July 13, the European Business Association met with Serhii Marchenko, Minister of Finance of Ukraine. The discussion was focused on draft law №5600 and the initiatives related to this document, as well as negotiations with the IMF.  We also mentioned the topic of customs reform, etc. The Minister of Finance explained that draft law №5600 is an initiative of the Ministry of Finance because during the negotiations with the IMF it was necessary to demonstrate measures to ensure the budget for the next 2022-2024. According to the Minister of Finance, the President is interested in a fair tax system, he has joined the discussions on the draft law and supports most of the proposed initiatives. Meanwhile, the business has expressed its dissatisfaction with the quality of this draft law, which has been repeatedly mentioned in official letters and in community statements in the media. We agreed to hold a series of specialized discussions on a separate list of problematic provisions of the draft law in order to provide substantive and professional arguments for business and develop a compromise text of the document. Thus, the Minister agreed to have additional meetings to discuss the rules related to VAT, rent, carry forward losses, etc. (despite the existence of similar practices in some other countries, it is necessary to take into account the comparability of the conditions for the implementation of these provisions). Regarding the excise tax on green energy, we agreed that the state should comply with its obligations, so the accumulated debts to RES producers should be repaid. The key principles of doing business, namely equal rules of the game for all participants, should be restored, and the state should encourage the development of environmentally friendly production of electricity from renewable sources, rather than outdated technologies that are harmful to the environment. Meanwhile, the business community emphasized that in order to achieve the ultimate goal behind draft law №5600 which is to close the hole in the budget, it would be appropriate to pay attention to the serious need to combat the shadow economy, comprehensive customs reform, the impossibility of rolling back fiscalization reforms. When discussing the issues with the State Customs Service, Marchenko noted that currently there are many questions to this body. At the same time, the Minister agreed to consider specific cases of complaints about systemic violations of the rights of foreign trade entities during customs clearance. In order to facilitate the widespread use of the AEO institution, the EBA proposed to revise some criteria for compliance with the AEO status, in particular the criterion of financial stability. Regarding the cooperation with the IMF, it went mainly about anti-corruption decisions. The IMF is important to ensure the stability of anti-corruption bodies in the country, judicial reform, and so on. According to the Minister, the last meeting between the representatives of the IMF and Ukraine ended up quite constructive. Besides, the business raised other issues - the development of the corporate culture of customs and tax authorities, in particular, improving the service function of these authorities, the terms for the liquidation of the tax police and the creation of a Bureau of Economic Security, other sectoral issues were also discussed.  On behalf of the European Business Association, we thank Serhii Marchenko for the meeting. Nevertheless, we very much hope that together the government and business will be able to work out a compromise version of draft law №5600, as well as create mechanisms to ensure the transparent operation of customs and tax authorities.
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On July 13, the European Business Association met with Serhii Marchenko, Minister of Finance of Ukraine.

The discussion was focused on draft law №5600 and the initiatives related to this document, as well as negotiations with the IMF.  We also mentioned the topic of customs reform, etc.

The Minister of Finance explained that draft law №5600 is an initiative of the Ministry of Finance because during the negotiations with the IMF it was necessary to demonstrate measures to ensure the budget for the next 2022-2024. According to the Minister of Finance, the President is interested in a fair tax system, he has joined the discussions on the draft law and supports most of the proposed initiatives.

Meanwhile, the business has expressed its dissatisfaction with the quality of this draft law, which has been repeatedly mentioned in official letters and in community statements in the media.

We agreed to hold a series of specialized discussions on a separate list of problematic provisions of the draft law in order to provide substantive and professional arguments for business and develop a compromise text of the document. Thus, the Minister agreed to have additional meetings to discuss the rules related to VAT, rent, carry forward losses, etc. (despite the existence of similar practices in some other countries, it is necessary to take into account the comparability of the conditions for the implementation of these provisions).

Regarding the excise tax on green energy, we agreed that the state should comply with its obligations, so the accumulated debts to RES producers should be repaid. The key principles of doing business, namely equal rules of the game for all participants, should be restored, and the state should encourage the development of environmentally friendly production of electricity from renewable sources, rather than outdated technologies that are harmful to the environment.

Meanwhile, the business community emphasized that in order to achieve the ultimate goal behind draft law №5600 which is to close the hole in the budget, it would be appropriate to pay attention to the serious need to combat the shadow economy, comprehensive customs reform, the impossibility of rolling back fiscalization reforms.

When discussing the issues with the State Customs Service, Marchenko noted that currently there are many questions to this body. At the same time, the Minister agreed to consider specific cases of complaints about systemic violations of the rights of foreign trade entities during customs clearance. In order to facilitate the widespread use of the AEO institution, the EBA proposed to revise some criteria for compliance with the AEO status, in particular the criterion of financial stability.

Regarding the cooperation with the IMF, it went mainly about anti-corruption decisions. The IMF is important to ensure the stability of anti-corruption bodies in the country, judicial reform, and so on. According to the Minister, the last meeting between the representatives of the IMF and Ukraine ended up quite constructive.

Besides, the business raised other issues – the development of the corporate culture of customs and tax authorities, in particular, improving the service function of these authorities, the terms for the liquidation of the tax police and the creation of a Bureau of Economic Security, other sectoral issues were also discussed. 

On behalf of the European Business Association, we thank Serhii Marchenko for the meeting. Nevertheless, we very much hope that together the government and business will be able to work out a compromise version of draft law №5600, as well as create mechanisms to ensure the transparent operation of customs and tax authorities.

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