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New tax rates, indirect control methods and customs conflicts – what business discussed with the Ministry of Finance

07/ 02/ 2022
  On February 4, the European Business Association met with Deputy Ministers of Finance of Ukraine – Ms. Svitlana Vorobei and Mr. Yuriy Draganchuk to discuss tax and customs issues relevant to business. The tax part of the discussion highlighted the issues of reducing personal income taxation and introducing household income taxation, development of the concept of indirect methods of control over the completeness of personal income tax reporting, the mandatory use of RSO by FOPs, environmental tax, etc. Thus, the Deputy Ministers reported that draft Law №6539 On Household is currently being considered by the Ministry. In reforming the personal income tax system, the Ministry of Finance proposes maintaining the current tax structure without merging the three taxes into one. Besides, it is important for the Ministry of Finance to ensure a balance between state and local budgets in the study of compensators, which will be further discussed in public. Similarly, the Concept of Applying Indirect Methods of Income Control is currently being worked on at the Ministry and will be submitted to the Cabinet of Ministers by March 30. One month before this date, the draft Concept must be published on the website of the Ministry of Finance for public discussion. Business expects to be involved in the development of such regulatory acts that will have a direct impact on each taxpayer. In connection with the mandatory introduction of RSO from January 1 for the 2nd and 3rd groups of FOPs (private individuals), the bank representatives reported the problem of the mass return of POS terminals to banks. We will continue to study this problem and hope that the situation with terminals will stabilize after the transition period. The EBA experts announced the readiness of the mobile communications industry to discuss amendments to CMU Resolution №85 of February 7, 2018, to unlock the obtainment of VAT installments for equipment imported for the construction of new generation telecommunications networks. Environmental tax rates are rising this year; thus, the CO2 emissions tax has risen by three times. Meanwhile, Law of Ukraine № 1914-IX of 30.11.2021 (draft law №5600) provides for the possibility of funding measures for reducing emissions with tax revenues. To implement this provision, businesses are ready to discuss effective ways to use funds with the Ministry of Environment and the Ministry of Finance. Business thanked the representatives of the Ministry of Finance for preparing high-quality generalized tax consultations last year and expressed hope that this year the productivity of the Ministry of Finance will not decrease. The business already has several proposals, which are currently being processed and will be additionally sent to the Ministry of Finance. Within the customs part of the discussion, business raised the prospects of unification of import duty rates on certain goods under draft Law №6149 On Amendments to the Customs Tariff of Ukraine, updating the Customs Tariff to the Codification Standard of 2022 and resolving the issue of customs clearance of personal belongings of individuals who change permanent residence. At the same time, the EBA voiced its position on the inexpediency of increasing import duty rates on plant protection products. Due attention was paid to Draft Law №3562 On Amendments to the Customs Code of Ukraine (on the procedure for controlling the correctness of determining the customs value of goods). Business does not fully agree with the introduction of an additional method of determining the customs value based on indicative prices from the electronic risk management system of the State Customs Service. Thus, business offers the transfer of control functions, including the customs value of goods to the post-audit stage. According to the Ministry of Finance, such an option is possible as an exception rather than as a rule. Business also discussed with the Ministry of Finance the importance of introducing common approaches to the application of customs legislation in different regional customs so that a single legal entity at customs can be established. We are on the same side as the Ministry on this issue. The position of the Ministry and business on the criminalization of smuggling coincides conceptually but the wording of the draft law in the current version may cause legal uncertainty, so further joint work is needed to revise draft Law №5420. There was also the discussion of the need to regulate the terms of currency control in the customs warehouse regime (IM74). Thus, currently Ukrainian companies are in a discriminatory position in relation to the nearest foreign countries. Therefore, business asked for support from the Ministry of Finance to review the terms of currency supervision to correct the existing collision in a dialogue with the National Bank.   Be the first to learn about the latest EBA news with our Telegram-channel – EBAUkraine.

On February 4, the European Business Association met with Deputy Ministers of Finance of Ukraine – Ms. Svitlana Vorobei and Mr. Yuriy Draganchuk to discuss tax and customs issues relevant to business.

The tax part of the discussion highlighted the issues of reducing personal income taxation and introducing household income taxation, development of the concept of indirect methods of control over the completeness of personal income tax reporting, the mandatory use of RSO by FOPs, environmental tax, etc.

Thus, the Deputy Ministers reported that draft Law №6539 On Household is currently being considered by the Ministry. In reforming the personal income tax system, the Ministry of Finance proposes maintaining the current tax structure without merging the three taxes into one. Besides, it is important for the Ministry of Finance to ensure a balance between state and local budgets in the study of compensators, which will be further discussed in public.

Similarly, the Concept of Applying Indirect Methods of Income Control is currently being worked on at the Ministry and will be submitted to the Cabinet of Ministers by March 30. One month before this date, the draft Concept must be published on the website of the Ministry of Finance for public discussion.

Business expects to be involved in the development of such regulatory acts that will have a direct impact on each taxpayer.

In connection with the mandatory introduction of RSO from January 1 for the 2nd and 3rd groups of FOPs (private individuals), the bank representatives reported the problem of the mass return of POS terminals to banks. We will continue to study this problem and hope that the situation with terminals will stabilize after the transition period.

The EBA experts announced the readiness of the mobile communications industry to discuss amendments to CMU Resolution №85 of February 7, 2018, to unlock the obtainment of VAT installments for equipment imported for the construction of new generation telecommunications networks.

Environmental tax rates are rising this year; thus, the CO2 emissions tax has risen by three times. Meanwhile, Law of Ukraine № 1914-IX of 30.11.2021 (draft law №5600) provides for the possibility of funding measures for reducing emissions with tax revenues. To implement this provision, businesses are ready to discuss effective ways to use funds with the Ministry of Environment and the Ministry of Finance.

Business thanked the representatives of the Ministry of Finance for preparing high-quality generalized tax consultations last year and expressed hope that this year the productivity of the Ministry of Finance will not decrease. The business already has several proposals, which are currently being processed and will be additionally sent to the Ministry of Finance.

Within the customs part of the discussion, business raised the prospects of unification of import duty rates on certain goods under draft Law №6149 On Amendments to the Customs Tariff of Ukraine, updating the Customs Tariff to the Codification Standard of 2022 and resolving the issue of customs clearance of personal belongings of individuals who change permanent residence. At the same time, the EBA voiced its position on the inexpediency of increasing import duty rates on plant protection products.

Due attention was paid to Draft Law №3562 On Amendments to the Customs Code of Ukraine (on the procedure for controlling the correctness of determining the customs value of goods). Business does not fully agree with the introduction of an additional method of determining the customs value based on “indicative prices” from the electronic risk management system of the State Customs Service. Thus, business offers the transfer of control functions, including the customs value of goods to the post-audit stage. According to the Ministry of Finance, such an option is possible as an exception rather than as a rule.

Business also discussed with the Ministry of Finance the importance of introducing common approaches to the application of customs legislation in different regional customs so that a single legal entity at customs can be established. We are on the same side as the Ministry on this issue.

The position of the Ministry and business on the criminalization of smuggling coincides conceptually but the wording of the draft law in the current version may cause legal uncertainty, so further joint work is needed to revise draft Law №5420.

There was also the discussion of the need to regulate the terms of currency control in the “customs warehouse” regime (IM74). Thus, currently Ukrainian companies are in a discriminatory position in relation to the nearest foreign countries. Therefore, business asked for support from the Ministry of Finance to review the terms of currency supervision to correct the existing collision in a dialogue with the National Bank.

 

Be the first to learn about the latest EBA news with our Telegram-channel EBAUkraine.

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