Tax system modernization requires a balanced approach and doesn’t tolerate unprepared haste
European Business Association welcomes efforts to modernize tax rules through implementing of global experience. At the same time, the Association reiterates that any changes should be aimed, first and foremost, at encouraging honest taxpayers, combating tax evasion and creating equal rules for business.
Taking into account the above mentioned, certain norms of the Draft Law №1210 cause concern of the transparent businesses.
First of all, it is about the date of entry into force of the new rules – after its publication – on January 1 or July 1, 2020. Such a hasty implementation of the law will deprive taxpayers from an opportunity to adapt to the new rules properly, to set up accounting systems, to train staff. Similar effects are also expected in the work of supervisory authorities. In practice, this will place considerable administrative burden on taxpayers, controllers and, as a consequence, increase the risk of conflict between business and public authorities. Haste in implementing the new rules put into questions activity of conscious taxpayers and budget revenues in general.
At the same time, along with the implementation of the international experience, the draft law contains a number of norms that businesses perceive as a rejection of positive gains made in the past.
Besides, there is a proposition to increase substantially the time of tax audits and the reasons for their conduction, to establish a burdensome amount of fines (a fixed penalty for late registration of tax invoices 3400 UAH). At the same time, to exclude the norm concerning personal responsibility of tax inspectors for unreasonable overcharging of taxes and fees from the Tax Code.
These are only a few issues from the bigger amount of them raised by the business community.
Taking into account the magnitude of the proposed changes, introduction of rules and concepts that are new to the Ukrainian tax system, it seems absolutely reasonable to continue discussion of the proposed changes in order to develop a balanced position.
Business supports intention to initiate tax reform in spring of 2020 and implement the necessary legislative changes since in 2021, consistent with the principle of tax law stability. So, business community looks forward to discuss tax innovations in a timely and comprehensive manner and find compromise solutions.
At the same time, European Business Association thanks for inclusion of business representatives to the VR working group on Finance, Taxes and Customs in order to discuss the document in a constructive way and draft an agreed version of the document.