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The extractive industry is of great importance for economic development. According to the report of the Extractive Industries Transparency Initiative, in 2020 alone, the contribution of mining companies to Ukraine’s GDP amounted to UAH 190.34 billion, or 4.54% of total GDP, and the share of all goods and services in the total value of exports was 4.94%.<\/p>\n
Almost a year ago, there was the adoption of the National Economic Strategy in which the state together with business and the public identified the vectors of Ukraine’s development until 2030. Thus, natural subsoil and minerals have been identified as the \u201cadded value foundation\u201d for Ukraine’s growing economy. And fair taxation has become one of the strategic tasks to stimulate the development of the extractive industry, surely, along with the rule of law and economic freedom.<\/p>\n
All this should help increase production and attract foreign investment in the industry. But the practical implementation of these initiatives did not meet the efficacy expectations. While developing reforms on facilitated access to subsoil and deregulation, business still has to talk about state interference into the subsoil activities.<\/p>\n
A significant part of budget-generating companies in the field of metal ore mining is represented in the European Business Association. In 2020, they provided jobs for a total of 115,230 Ukrainians, paid 91 billion hryvnias in taxes, and invested almost 30 billion hryvnias in the country’s economy. However, business is currently experiencing significant pressure from regulatory authorities. Within less than two months of 2022, the second company has received claims from the regulatory authorities regarding rent arrears.<\/p>\n
Surely, extraction rents are a sensitive issue for the Ukrainian subsoil users, and until earlier this year, the domestic regulatory field allowed for multiple interpretations of the tax base. At the same time, the Constitution of Ukraine emphasized the retroactivity of laws, so the companies should not be accused of commissioning illegal actions that were not, in fact, illegal at the time of their commission.<\/p>\n
Business wants to operate according to clear and predictable rules, to have transparent and equal conditions for all participants in the industry. And fiscal pressure on transparent business through inspections or in any other way obviously damages not only a particular business but the country as a whole. After all, foreign investors and partners can learn about such violations. So, it is a rhetorical question whether they will want to invest in the development of the Ukrainian mining industry after seeing that attitude towards business.<\/p>\n
Surely, one should take responsibility if there is a violation. However, this requires clear rules to understand what is legal and what is not. Moreover, the state should not apply the current rules to the past, because it is likely that everyone may be held accountable.<\/p>\n
The European Business Association has repeatedly stressed that there is a lack of trust among government, business, society in Ukraine. That adds up to other fundamental problems that hinder the development of the country. And such cases are unlikely to contribute to the formation of this trust. Therefore, the business sincerely hopes that this odious trend will be stopped. Moreover, in the current difficult geopolitical situation, we must all be in the same boat, because we are strong when we are united!<\/p>\n
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