The decision on draft law №5600 is completely incomprehensible to business

25/ 06/ 2021

Yesterday, the Verkhovna Rada Committee on Finance, Tax, and Customs Policy supported the registration of draft law №5600, which provides for changes to tax legislation. It is worth noting that on the eve of the voting, a significant number of MPs were unanimous that this draft law does not suit any sector of the economy and any relevant business association. The deputies dissatisfaction is best illustrated by the fact that there are 7 registered alternative draft laws with 120 deputies as co-authors. During the meeting of the Committee, the deputies suggested that the best option would be to prepare a revised version of the draft law with the letter D, which would completely exclude the rules on tax administration, and could increase the administrative pressure of the tax service. It was also suggested that the revised version introduce a balanced approach to increasing rental tax rates. However, to the great surprise of business, the subsequent decisions of the Committee radically contradicted the positions expressed by the deputies earlier and during the sitting of the Committee. Thus, the silent majority of the Committee, which did not express their position on the document, voted in favor of draft law №5600. Unfortunately, some deputies who opposed the draft law during the sitting of the Verkhovna Rada Committee changed their position during the vote and abstained from voting. Also, yesterday, the European Business Association with the participation of business and government representatives held an expert discussion of draft law №5600 that raises concerns among the business community. The discussion only confirmed and consolidated the already widespread opinion about the inadmissibility of this draft law. The business sought to understand what prompted the authors of the draft law to propose such rules, what problems they were trying to solve, and whether they were aware of the negative consequences that this draft law would lead to. Unfortunately, the initiators of the draft law, represented by the Ministry of Finance, could not join the discussion to answer the above questions. Following the discussion, the participants almost unanimously concluded that the draft law is not aimed at economic development and improving the business climate in Ukraine. Rather, the draft law increases fiscal pressure on transparent businesses and creates a basis for abuse of power from tax officials. We have to emphasize that during the drafting of this law there was no dialogue between the business and the authors of the law. Constructive comments, that businesses sent to the authors, were completely ignored. It should be noted that these comments were also sent to the peoples deputies, but, unfortunately, this did not deter them from voting for this project. Given the danger looming over the honest business and intending to prevent further deterioration of the business climate, the European Business Association appeals to MPs and, in particular, the Speaker of the Verkhovna Rada and faction leaders not to support draft law 5600 even in the first reading. Instead, we call for a compromise of changes that would not increase the administrative pressure on business and would not create a basis for the arbitrary conduct of regulatory authorities. Against the background of FDI outflows, putting at risk the work of businesses still operating in Ukraine is an extremely dangerous and ill-considered decision. Appeal Letter to the Parliament Be the first to learn about the latest EBA news with our Telegram-channel – EBAUkraine.

Yesterday, the Verkhovna Rada Committee on Finance, Tax, and Customs Policy supported the registration of draft law №5600, which provides for changes to tax legislation.

It is worth noting that on the eve of the voting, a significant number of MPs were unanimous that this draft law does not suit any sector of the economy and any relevant business association. The deputies’ dissatisfaction is best illustrated by the fact that there are 7 registered alternative draft laws with 120 deputies as co-authors.

During the meeting of the Committee, the deputies suggested that the best option would be to prepare a revised version of the draft law with the letter “D”, which would completely exclude the rules on tax administration, and could increase the administrative pressure of the tax service. It was also suggested that the revised version introduce a balanced approach to increasing rental tax rates.

However, to the great surprise of business, the subsequent decisions of the Committee radically contradicted the positions expressed by the deputies earlier and during the sitting of the Committee. Thus, the silent majority of the Committee, which did not express their position on the document, voted in favor of draft law №5600. Unfortunately, some deputies who opposed the draft law during the sitting of the Verkhovna Rada Committee changed their position during the vote and abstained from voting.

Also, yesterday, the European Business Association with the participation of business and government representatives held an expert discussion of draft law №5600 that raises concerns among the business community. The discussion only confirmed and consolidated the already widespread opinion about the inadmissibility of this draft law. The business sought to understand what prompted the authors of the draft law to propose such rules, what problems they were trying to solve, and whether they were aware of the negative consequences that this draft law would lead to.

Unfortunately, the initiators of the draft law, represented by the Ministry of Finance, could not join the discussion to answer the above questions. Following the discussion, the participants almost unanimously concluded that the draft law is not aimed at economic development and improving the business climate in Ukraine. Rather, the draft law increases fiscal pressure on transparent businesses and creates a basis for abuse of power from tax officials.

We have to emphasize that during the drafting of this law there was no dialogue between the business and the authors of the law. Constructive comments, that businesses sent to the authors, were completely ignored. It should be noted that these comments were also sent to the people’s deputies, but, unfortunately, this did not deter them from voting for this project.

Given the danger looming over the honest business and intending to prevent further deterioration of the business climate, the European Business Association appeals to MPs and, in particular, the Speaker of the Verkhovna Rada and faction leaders not to support draft law 5600 even in the first reading. Instead, we call for a compromise of changes that would not increase the administrative pressure on business and would not create a basis for the arbitrary conduct of regulatory authorities.

Against the background of FDI outflows, putting at risk the work of businesses still operating in Ukraine is an extremely dangerous and ill-considered decision.

Appeal Letter to the Parliament

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