Draft Law №4101-d should be finalized to balance budget revenues

21/ 12/ 2020

The European Business Association welcomes the adoption of the state budget for 2021 by the Verkhovna Rada earlier last week. At the same time, we appeal to the people’s deputies to finalize and adopt the draft law №4101-d, which is closely connected with the adopted Law of Ukraine “On the State Budget”. The EBA experts are convinced that without the adoption of this draft law, the state will not receive the necessary revenues next year, provided by the budget. In the context of the draft law № №4101-d, business has several remarks. Thus, we believe that lifting the moratorium on inspections during the period of increasing morbidity and the possible introduction of stricter quarantine measures is not appropriate. Besides, business representatives are convinced that the increase in excise and environmental taxes provided by the draft law during the economic crisis will negatively affect the economy of Ukraine and will cause a decrease in tax revenues. Of particular concern is the provision of the draft law on granting regulatory authorities the right to receive the banks’ information on the status of taxpayers accounts, cash flows and account transactions, as well as the existence of agreements on safekeeping / renting a bank safe, which creates conditions for increasing pressure from tax bodies. This further simplifies the procedure for collecting tax debt for the State Tax Service, without going to court, regardless of the amount of debt and the duration of the delay. The EBA member companies also draw attention to the inadmissibility of changes to limit the right to carry forward losses for seven consecutive tax years, starting from the tax year of their occurrence, but not earlier than 2014. This rule requires additional clarification of terminology on determining the date of preparation of primary accounting documents in electronic form. Separately, the EBA considers it necessary to supplement the draft law with provisions on the labeling of electronic cigarette liquids. Also, the draft law contains important business decisions on the development of the wine industry and the regulation of alcoholic beverages. In particular, the abolition of excise tax stamps for still wines and the introduction of a new type of packaging - aluminum bottles, proposed a separate section on beer labeling, abolished the obligation to indicate the license on the labels of alcoholic beverages, allowed the import of alcoholic beverages, abolished penalties for failure to report import of alcoholic beverages. Svitlana Mykhailovska. EBA Deputy Director for Advocacy. In general, the approved State Budget for 2021 is not balanced enough in the context of medicine and education, as there is an obvious lack of funds for the development of these areas. Additional revenues for the development of these areas could be generated from the fight against the shadow economy. Therefore, the EBA business community calls to focus efforts next year in strengthening the fight against smuggling and shady schemes. We hope that in the near future MPs will be able to finalize and adopt the above draft law. This will allow, on the one hand, to ensure budget revenues and, on the other hand, not to create excessive pressure on business, but to allow companies to work according to predictable and transparent rules. The EBA would also like to reiterate the importance of early and gradual adoption and implementation of any tax changes so that businesses have enough time to adapt to the new conditions.

In the context of the draft law № №4101-d, business has several remarks. Thus, we believe that lifting the moratorium on inspections during the period of increasing morbidity and the possible introduction of stricter quarantine measures is not appropriate.

Besides, business representatives are convinced that the increase in excise and environmental taxes provided by the draft law during the economic crisis will negatively affect the economy of Ukraine and will cause a decrease in tax revenues.

Of particular concern is the provision of the draft law on granting regulatory authorities the right to receive the banks’ information on the status of taxpayers’ accounts, cash flows and account transactions, as well as the existence of agreements on safekeeping / renting a bank safe, which creates conditions for increasing pressure from tax bodies. This further simplifies the procedure for collecting tax debt for the State Tax Service, without going to court, regardless of the amount of debt and the duration of the delay.

The EBA member companies also draw attention to the inadmissibility of changes to limit the right to carry forward losses for seven consecutive tax years, starting from the tax year of their occurrence, but not earlier than 2014. This rule requires additional clarification of terminology on determining the date of preparation of primary accounting documents in electronic form.

Separately, the EBA considers it necessary to supplement the draft law with provisions on the labeling of electronic cigarette liquids.

Also, the draft law contains important business decisions on the development of the wine industry and the regulation of alcoholic beverages. In particular, the abolition of excise tax stamps for still wines and the introduction of a new type of packaging – aluminum bottles, proposed a separate section on beer labeling, abolished the obligation to indicate the license on the labels of alcoholic beverages, allowed the import of alcoholic beverages, abolished penalties for failure to report import of alcoholic beverages.

Svitlana Mykhailovska EBA Deputy Director for Advocacy

In general, the approved State Budget for 2021 is not balanced enough in the context of medicine and education, as there is an obvious lack of funds for the development of these areas. Additional revenues for the development of these areas could be generated from the fight against the shadow economy. Therefore, the EBA business community calls to focus efforts next year in strengthening the fight against smuggling and shady schemes.

We hope that in the near future MPs will be able to finalize and adopt the above draft law. This will allow, on the one hand, to ensure budget revenues and, on the other hand, not to create excessive pressure on business, but to allow companies to work according to predictable and transparent rules. The EBA would also like to reiterate the importance of early and gradual adoption and implementation of any tax changes so that businesses have enough time to adapt to the new conditions.