A year ago, Ukrainian business presented ten priorities for the development of the Ukrainian economy to the ruling coalition of the Verkhovna Rada.

They were concerned with the main steps required for attraction of investment, stimulation of the national producer, protection and development of business, minimization of corruption, and reduction of tax pressure.

In the pages of Economic Truth, the Deputy Chairman of UAC summed up the interim results and reviewed the successes and failures of the parliament.

Cancel of “soybean amendments”

The good news was the long-expected repeal of the notorious "soybean amendments", one of the provisions of the bill №1210. Due to the refusal to reimburse VAT to traders, small and medium soybean and rapeseed producers were put on the uneven playing field with large agricultural corporations that could export themselves. The parliamentarians of the new convocation eliminated such a direct violation of the principles of the Tax Code and the Constitution. Thanks to this, we hope that we will be able to reverse the negative trend of lowering of soybean sowing areas, which were decreased by 25% during the last three years since the adoption of the "soybean amendments".

Legalization of all sectors on the land lease market and production

The profile committee of the Verkhovna Rada approved the relevant bill №3131-d. This is an achievement, because so far the authorities did not address the problem of illegal agricultural production making.

According to the authors of the project words, the illegal market for agricultural land lease is 28% of the total area of ​​agricultural land or about 12 million hectares out of 42 million hectares of agricultural lands of Ukraine. In 2019, the volume of illegal land lease in Ukraine amounted to UAH 19-69 billion. At the same time, budget losses at all levels from non-receipt of taxes and other payments are about UAH 6-22 billion per year. We hope that in the near future the parliament will consider and approve this bill.

Withdrawn capital tax

This question remains one of the main disappointments. There have been many discussions about replacing the income tax with the withdrawn capital tax and the Ministry of Finance has not yet provided a clear concept for its implementation, indicating the proposed levels of rates and restrictions. Work at the expert level and in the relevant committees of the Verkhovna Rada is being carried out, but there is no clear position of the government – so there is no result.

Electronic shipping document

An electronic shipping document and a system for controlling the physical volume of goods, which are supplied, has to block conversions from "bananas" to "wheat" on paper and other similar VAT evasion schemes, so-called “twists”. The importance of system implementation has been discussed for a long time. It helps not only to fight against “twists”, but also simplifies the documentation of transportation and sale of goods for legal taxpayers. The Ministry of Infrastructure is launching a pilot project on a voluntary basis, but its goal is moving to electronic document management in the design of shipping document, rather than control over the volume and range of goods in the sales chain.

At the same time, there is still no main thing - a government bill that would describe the design of such a system. It is unclear when such a bill will appear.

As the last three years have shown, without improving of the SBTI (system of blocking tax invoices) and filling it with a new information that will help to distinguish "twists" and honest taxpayers better, it is impossible to talk about a significant increase in VAT collection and harm reduction.

The damage that SBTI inflicts on legal business is significant and approaches critical, economically unacceptable values.

Private traction

One of the main failures is the complete disregard on the issue of railway transport reform: the separation of freight and passenger traffic, the introduction of a single tariff for the use of infrastructure and the admission of private traction.

The railway has turned from a factor in the development of production into its brake due to inflated tariffs, low quality of services and reduction of the network of freight stations. The lack of traction leads to an increase in the turnover of grain trucks and their deficit, although in the normal operation of the park they should be enough. As a result, the entire industry suffers because of losses, and our products do not reach domestic consumers or foreign buyers in time. The new law on railway transport has been waiting consideration by the transport committee for more than a year, but nothing is happening. In the meantime, its adoption is part of Ukraine's commitments under the Association Agreement with the EU. Apparently, politicians are afraid of two problems that will have to be solved after the adoption of the bill: the reduction of bloated Ukrzaliznytsia staff and the need to subsidize passenger traffic. Now the relevant costs have been shifted to industry, as well as the burden of the "green" tariff in energy. Not surprisingly, that our industrial production continues to decline, and Ukraine's economy is rapidly deindustrializing. This approach is the path to disaster. Agriculture and IT will not pull the country out without resumption of industrial production. The labor force, and the tax base, will continue to flee abroad with it, while pensionaries and other groups of social dependents will stay in the country. This guarantees the bankruptcy of the pension foundation, and then - and the general default.

Thursday, 22 October 2020

 

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