Ukrainian business calls on the Verkhovna Rada to adopt bill №8557 on the tax on withdrawn capital (PnVK) before the approval of the State Budget for 2019.

Representatives of key domestic business associations in the person of the Ukrainian Agri Council (UAC), the Union of Ukrainian Entrepreneurs, the Ukrainian Business Council, the Ukrainian Union of Industrialists and Entrepreneurs, the Federation of Employers of Ukraine and the Association of Taxpayers of Ukraine said this today at a press conference in UNIAN.

"Business urges people's deputies to solve the crucial issue of introducing a tax on withdrawn capital, which will stimulate the development of the domestic economy. Only after that to take the budget for the next year. You will always have the money to share. Let us first achieve what we would like to divide ", - said the deputy head of UAC, Mikhail Sokolov, during a press conference.

At the same time, business representatives formally appealed to the IMF leadership to reconsider their position regarding the introduction of this tax.

"The IMF should support the idea of ​​a tax on withdrawn capital, since its implementation fully coincides with those goals that the IMF puts before Ukraine - to stop the withdrawal of money from the country, to ensure a balanced budget. All this is being solved by the given draft law in the version that we now have”, - added Sokolov, emphasizing that the bill should be adopted as soon as possible and should be applied to all companies without exception, and not only to small and medium businesses.

In order to avoid budget losses that may arise in the first years after the introduction of PnVK, the business offered compensators in the form of down payments of not less than half of the amount currently payable in the form of a tax on profit.

"We offer a compensator that will completely balance the budget. It is about introduction of down payments for several years, which will be paid at a rate of at least 50% of the replaced income tax. As a business, we are ready for this step. So, for us, this is an additional burden, but we believe that this victim is not equal to the result and the benefit that the whole Ukrainian economy, society and the country will receive from the tax on withdrawn capital ", - said Sokolov.

Thus, he explained that the bill №8557 concerning the PnVC provides for the replacement of the income tax with the tax on the withdrawn capital. This will simplify tax administration and reduce the discretion of the State Fiscal Service of Ukraine (SFS).

"We create a very simple system - the business pays tax when it deducts money from business. It will lead, first of all, to the elimination of arbitrariness on the part of the SFS, because the model of the tax on the withdrawn capital does not provide any subjective judgments. As long as the business invests in business, it will not pay tax. In addition, the bill puts iron restraints to withdraw funds from the country, so business essentially puts money into the development of the domestic economy", - added Sokolov.

He recalled that UAC and other major agricultural associations have recently turned to the President to encourage the abolition of inefficient state support to the agrarian sector, in which payments are made either in favor of large companies or remain unused in the budget. Instead, the farmers proposed to send these funds to compensate for the loss of budget revenues that may arise in the first years of the introduction of the tax on withdrawn capital (this will lead to economic development, employment growth and wage level growth), and from the adoption of bills to reduce the VAT rate for certain types of agricultural products to 10% (this will help reduce retail food prices).

"Agrarians believe that it is better not to receive state aid at all, rather than to leave it as it is at the moment. Moreover, if we spend these funds on those areas that will really produce results for the development of the economy and growth of future healthy generations", - summed up the deputy chairman of the UAC.

Other participants in the press conference agreed that the introduction of the tax on withdrawn capital is a crucial step that needs to be implemented urgently.

Vice-President of the Ukrainian Union of Industrialists and Entrepreneurs Yulia Drogovoz stressed that the draft law No. 8557 should be adopted now, otherwise this idea may be finally halted in connection with election campaigns next year. In view of this, she transferred the business requirement to the Ministry of Finance and the Cabinet of Ministers to sit down at the negotiating table and seriously discuss the proposed compensation mechanism.

"This model is supported by domestic investors who see for themselves the possibility of using their funds objectively. This will allow them not only to keep their business afloat, but also to develop it, thereby developing the Ukrainian economy," she said.

Co-chairman of the Committee for the Development of Entrepreneurship of the Union of Ukrainian Entrepreneurs Andriy Yerashov added that the proposed mechanism of the PnVK completely changes the existing concept of business taxation, which discredits itself.

At the same time, the deputy head of the joint representative body of the employer party at the national level, Sergei Bilenky, noted that the worst scenario for the further introduction of the PnVK would be if the state would independently devise compensators without prior discussions with the business.

"The worst option that may be - if the authorities themselves come up with some compensators without conducting preliminary business consultations, which ultimately will discredit the whole idea of ​​introducing a capital tax," he said.

Recall that UAC participated in the elaboration of the Draft Law No. 8557 on the Income Tax Charging with the Tax on Expired Capital. President of Ukraine Petro Poroshenko in July 2018 brought him to parliament.

As a result of the adoption of this bill, tax administration is simplified, discretionary powers of the SFS diminish, and business receives an additional resource in the form of deferred tax until the withdrawal of funds from business, which will strengthen the financial position of companies and additional investment resources.