War risk insurance, simplified taxation system, blocking of tax invoices, avoidance of double taxation of relocated business were discussed at the meeting of the members of the Ukrainian Business Council with the Chairman of the Committee of the Verkhovna Rada of Ukraine on Finance, Tax and Customs Policy, Danylo Hetmantsev. The meeting took place within the framework of regular consultations of parliamentarians with the Ukrainian business coalition.
Business representatives raised a number of issues related to the adoption of laws important for entrepreneurs, and also discussed the impact of legislative changes on various areas of the economy.
Mykhailo Nepran, the first vice-president of the Chamber of Commerce and Industry of Ukraine, spoke about the proposal of the Association of Cities of Ukraine to transfer the administration of taxes on cars and property from the tax service to local communities. “Is it really the case that the tax office is unable to administer this tax?” – asked the first vice-president of the Chamber of Commerce and Industry.
According to Danylo Hetmantsev, there is really no income from local taxes in the plan of the tax service. At the same time, the head of the Committee expressed a negative attitude towards the transfer of local tax administration to local self-government bodies: “Because this is another checking body for business. Local self-government bodies should start with an inventory of objects subject to real estate tax and land tax. The local self-government should work more closely with the tax department: it is possible to take over the delivery of decisions on taxation and control over their implementation.”
The issue of business risk insurance during martial law was raised by Ivan Tarshin, representative of the association “Ukroliyaprom”, co-owner of GradOlia. According to him, the processing business has a desire to resume work, to develop, but there is no risk insurance. Government assistance is needed in the insurance of the investor’s war risks. It is also important to speed up the entry into force of the adopted draft law No. 8138.
Commenting on this issue, the chairman of the parliamentary committee said that draft law No. 9015, which provides for war risk insurance, is ready for the second reading in the hall, and should be voted on as a whole in the near future. In addition to approval in the second reading, it is important to provide funds in the State Budget for 2024, noted Danylo Hetmantsev.
Members of the URB also asked to speed up the development of by-laws to draft law No. 8138 (on “investments”). The law gave the government 6 months to develop such regulations. The business asks to speed up this process and is ready to provide its specialists for this.
Rodion Rybchynskyi, director of the “Flour Mills of Ukraine” Union, raised the question of the importance of reducing VAT on domestically produced food products to 7% throughout the supply chain. This will provide positive incentives for the domestic producer.
As the head of the parliamentary committee noted, this innovation can also be considered and introduced during the implementation of European legislation.
Mykhailo Nepran drew attention to the blocking of tax invoices. According to the first vice-president of the Chamber of Commerce and Industry, the changes developed by experts and business are blocked by the Ministry of Finance, all positive innovations are inhibited by the Ministry of Finance throughout 2023. It is appropriate to evaluate the actions of the relevant deputy minister and make appropriate decisions.
At the same time, Danylo Hetmantsev clarified that at the moment the project of amendments to Resolution 1165 is in the NAKC, and he promised to help speed up its consideration.
Borys Emeldesh, the president of the All-Ukrainian Professional Association of Entrepreneurs, expressed his concern over the fact that recently the discussion on the transformation of the Ukrainian simplified taxation system has been initiated exclusively by the Ministry of Finance and the IMF, in closed mode. But such changes were not discussed with business and think tanks. The head of the association called for changes to be introduced exclusively in an inclusive process, with calculations, analytics, and consultations with key stakeholders.
Danylo Hetmantsev noted that options for a simplified taxation system are currently being discussed, which will be implemented after Ukraine becomes a member of the EU. “The European Union insists on reducing the categories for a simplified taxation system, but we will definitely not do this until the end of the war. Among the countries that have passed the path from a candidate to EU membership, Poland is the most acceptable for us. This will all be a transparent discussion, no backroom decisions “.
The participants of the meeting noted that it would be good if the Ministry of Finance worked with analytical centers and business associations – because the so-called “Polish model” does not solve the problems that arise in Ukraine.
“When we talk about the Polish or any other model, we should not take the existing model, but the one that was used on the way to joining the EU. We need to create a transition period. I propose to work separately with the Ministry of Finance and develop our own proposals,” Grigol Katamadze, president of the Association of Taxpayers of Ukraine, emphasized.
Speaking about institutional reforms, Danylo Hetmantsev named the reforms that international partners are insisting on: rebooting the customs, tax and economic security bureaus.
Business representatives support these reforms, consider them critically important and call for their adoption as soon as possible.
Representatives of business associations are also concerned about the issue of double tax residency for relocated entrepreneurs. As the head of the tax committee noted, the authorities are not going to exempt Ukrainian entrepreneurs from taxation or from the need to report. It is important to reach an understanding with the leadership of those states where Ukrainian refugees live.
The participants of the meeting reached an understanding on all the issues discussed and agreed on joint further work on the implementation of these important projects.