Open dialogue: business met the President
Last Friday, EBA representatives met with the President of Ukraine Petro Poroshenko and Prime Minister Volodymyr Groysman.
In his speech, the President outlined three reforms – land reform, tax police reform and reform of income tax by replacing it with capital gains tax. In addition, during the meeting Mr. Poroshenko signed a long-awaited Law, aiming to protect the rights of participants in criminal proceedings. The President also informed that a new draft law on the creation of the National Bureau of Financial Security (NBFS) of Ukraine is currently under development. This authority is expected to properly and fairly regulate businesses’ interactions with the state authorities. According to the President, modern analytical techniques will be the primary tool to prevent delinquency, and therefore the authority should become a progressive institution that uses risk-oriented analysis models. Within a few days, a maximum of several weeks, the draft law will be passed to the Parliament.
Also, the President announced plans to extend the moratorium on inspections for small and medium-sized businesses. The President also clarified his position on land reform. He commented, “I support the land market. And I am sure that so does the majority in this hall. We will make a decisive step if we fill the land cadastre completely. I set the task to do it in a year. Without 100% digitization of the land cadastre, we cannot talk about launching the land market”.
The President stated his position that capital gains tax should replace tax on profit. Mr. Poroshenko also mentioned problems of a shortage of grain carriages, the regulation of Internet commerce, the fight against counterfeiting, and the outflow of intellectual capital. Finally, the President said that he would like business to work closely with Parliament and Government to accelerate reforms in Ukraine.
In his turn, Volodymyr Groysman noted that it is time not only to eliminate the consequences of economic decline, but also to increase long-term growth potential. The Prime Minister announced the benchmark for desired GDP growth of 5% or even 7% per year, and also mentioned the most anticipated draft laws on the restoration of lending to the real sector and the introduction of deferred payment for VAT when importing technical equipment.
Also during the meeting, the presentation of the Concept for the creation of the National Bureau of Financial Security of Ukraine (introduced by Nina Yuzhanina) and the de-concentration in the field of land relations and counteraction of the shadow land market were presented (introduced by Oleksandr Bakumenko).
Anna Derevyanko, Executive Director of the European Business Association, in her speech thanked the President for signing the long-awaited Law and noted the established work with the General Prosecutor’s Office of Ukraine. She also commented on the main theses of the President and once again raised the most pressing problems for business, which are awaiting resolution. EBA members are waiting for the text of the concept and Draft Law on the establishment of the NBFS so that they can discuss and provide constructive feedback. There is still no consensus on capital gains tax within the EBA. Ms. Derevyanko noted that the business community had some concerns that need to be taken into account when making a final decision.
Ms. Derevyanko once again emphasized the importance of solving the problems of grey imports and smuggling, security inside the country, shortage of skilled personnel and “brain drain”. The healthcare sector was mentioned separately – the work to improve the availability of medicines for patients’ needs to be continued both by ensuring coherent interaction between all the authorities and State Enterprises in the healthcare sector and by further improving the mechanism of reimbursement and public discussion of the Government’s plans to expand the program with new ICD codes. The EBA hopes that the medical reform beginning in 2018 will have a positive outcome, while issues such as the procurement of drugs under the National List and the opportunities for further development of medical products sector will be resolved.
Important topics were discussed such as the proposed anticorruption court, transparent privatization, land reform, and transparency of the electoral process, which are concerns not only of the EU, the USA and the IMF, but also of investors who are monitoring the course of reforms in Ukraine. EBA members closely monitor the progress of reforms and look forward to their implementation.
We sincerely thank all the participants of the meeting and the President and Prime Minister for this frank dialogue.