The conference “Restoring Ukraine – Institutional Changes and Labor Legislation”, organized by the Ukrainian Business Council and the National Business Coalition, was held in Kyiv. The Economic Expert Platform was an analytical partner.

The conference was attended by Olena Shulyak, Head of the Servant of the People Party and Chair of the Parliamentary Committee on the Organization of State Power, Galyna Tretiakova, Chair of the Parliamentary Committee on Social Policy and Veterans’ Rights, as well as representatives of leading business associations.

Olena Shulyak spoke about the work on updating housing legislation – abolishing the archaic 1983 Housing Code and developing a high-quality new framework – the draft law on the Basic Principles of Housing Policy. This new project should create a modern model with social housing, municipal funds, and support for IDPs and youth.

Halyna Tretiakova spoke about important projects that are currently being worked on by the Committee on Social Policy and called on representatives of the business community to join the work on them: Draft Law No. 10147 (on workplace safety), Draft Law No. 12209 (on modernization of the social insurance system and ensuring effective support for people who have partially or completely lost their ability to work), Draft Law No. 12291-1 (on suspension of certain provisions of the collective agreement), Draft Law No. 8143 (on freedom of entrepreneurship).

Borys Emeldesh, President of the All-Ukrainian Professional Association of Entrepreneurs, presented the problem of the lack of clear criteria for labor relations in Ukrainian legislation. He noted that this poses a threat to small and microbusinesses, facilitates tax evasion through pseudo-individual entrepreneurs, and leads to discrimination and excessive inspections of microentrepreneurs.

“In Ukraine, the criteria of labor relations have not yet been defined by law, although inspectors of the State Labor Service use them in practice, based on the recommendations of the International Labor Organization,” Emeldes emphasized. He presented statistics of court decisions on the reclassification of civil law relations, which demonstrates the lack of a unified approach and negative dynamics in this area.

Volodymyr Dubrovsky, Senior Economist at CASE Ukraine, Chief Expert of the Tax Reform Group of the Economic Expert Platform, presented the results of a study of international experience on the criteria of labor relations. The experts analyzed the practices of 9 European countries. He emphasized the importance of a scientific approach to the formation of criteria based on the theory of the firm: “If a legal entity can take the place of an individual, it is a contractor, if not, it is an employee.”

Galyna Tretiakova emphasized that, according to the ILO definition, labor relations are characterized by the economic dependence of an employee on an employer (when 70-90% of a person’s income comes from one employer). She warned that the full implementation of the ILO requirements could lead to a presumption of an employment relationship regardless of the type of its formalization, which would threaten the existence of civil contracts.

Ms. Tretyakova also raised the issue of the status of individual entrepreneurs: “We have a problem in that sole proprietors, except for the self-employed, are not recognized as entities in Europe. The IMF and Europe consider any individual entrepreneur to be an employer in the full sense of the word.” She emphasized the need to introduce the concept of a household as an economic entity and to enable such an entity to carry out business activities without registering as an individual entrepreneur.

The participants agreed to jointly develop a new draft law based on ROM 5054-1, taking into account the best European experience.

Olena Shulyak spoke about the status of draft law No. 10308, which aims to introduce transparent tenders for the placement of kiosks and parking lots.

“According to experts, the city of Kyiv receives unaccounted for black cash from parking lots alone in the amount of one billion hryvnias annually. We propose to transfer kiosks and parking lots to ProZorro, to electronic platforms and open bidding,” Shulyak said.

She also noted that the draft law provides for the development of a scheme for the placement of kiosks for the entire city with mandatory public discussions. However, according to her, this draft law has not been submitted to the Verkhovna Rada for more than a year due to a lack of political will.

Galyna Tretyakova called on business associations to become more actively involved in advocating for complex bills that are important for the economy and to synchronize their actions with MPs.

Yefrem Lashchuk from the Economic Expert Platform presented the results of a study of tax privileges in Ukraine. According to his data, there are currently 224 tax privileges in Ukraine, which result in the budget losing UAH 155 billion.

He paid special attention to the VAT exemption for goods from foreign marketplaces worth up to 150 euros that arrive via international mail. According to him, this benefit costs the budget 17 billion hryvnias annually and significantly distorts competition. Lashchuk proposed to introduce the European One Stop Shop model envisaged by draft laws No. 12429 and No. 12430.

Oleksandr Yavorsky from the American Chamber of Commerce supported the initiative, noting that the parcel tax exemption negatively affects legitimate businesses, manufacturers, and retailers, and leads to job losses. For comparison, he cited the following data: last year, the European Union received 4.6 billion parcels, Ukraine received 76 million, and 17 million parcels were stopped at the border in the EU due to security violations.

Olena Shulyak expressed her support for the abolition of the privilege, but emphasized the need for proper communication with the public: “We understand that every MP is backed by his or her voters, and when the draft law comes to the session hall, voters will start to react.”

Halyna Tretiakova suggested a comprehensive solution to the problem through personal income tax reform and the introduction of the principle of tax refunds to the breadwinner for each dependent.

Tetyana Koshchuk, taxation expert at the Growford Institute, noted that the problem in Ukraine is not so much personal consumption as business schemes: “Out of the 100 largest recipients of parcels, 80 did not pay any taxes, having received about 300 parcels each per year. The number of parcels is growing from year to year. In 2023, 51 million parcels were received, and in 2024, 73 million parcels were received.”

Yuriy Perohanych, director of the Association of Information Technology Enterprises of Ukraine, emphasized that this benefit is actually granted to foreign producers, not Ukrainian consumers. This is a loss for both Ukrainian producers and consumers.

Galyna Tretiakova reported on the work on the draft law No. 5651-d, which should regulate the issue of providing fare benefits and compensation to carriers. She noted that the Committee has sent inquiries to all relevant ministries and the process of coordinating positions is underway. Halyna called on business associations to join the work on the draft law No. 5651-d finalized by the Committee.

Ihor Zhytinsky, Chairman of the All-Ukrainian Association of Passenger Carriers, described the unfair practice when the state provides benefits to citizens but does not provide a mechanism for compensating carriers. “As a result, the business suffers financial losses, salaries in the industry remain low, not exceeding UAH 20 thousand, which does not allow us to book employees. In the end, most beneficiaries do not receive a guaranteed benefit because routes in the regions are being closed,” he explained.

Efrem Lashchuk proposed to amend labor legislation to overcome gender inequality in the labor market. The proposals include: introducing mandatory reporting on the pay gap, prohibiting the inclusion of a non-disclosure clause in employment contracts, optimizing the duration of maternity leave, and introducing a mechanism for sharing leave between parents.

Olga Panteleimonova, representative of the Ukrainian Film Academy, noted that the creative industry is actively working with equality content and offered her assistance in developing relevant proposals.

Galyna Tretyakova supported the initiative to create a comprehensive bill on this issue: “We are doing our best to ensure that maternity benefits for employers are the same as paternity benefits. So that the employer does not treat a woman as an employee who will give birth to a child and “drop out” of the work process for a while.”

Oleg Hetman highlighted the issue of the Cabinet of Ministers’ plans to establish the State Agency for the Settlement of War Risks. According to him, representatives of the insurance industry believe that this function should be performed by private insurance companies, not by a new state structure. The draft law No. 12372 from the Cabinet of Ministers contains discriminatory norms and non-market mechanisms and needs to be significantly adjusted.

Halyna Tretyakova explained that in European practice, war risk insurance agencies provide for private business participation of up to 50%. “At the same time, I have never seen 100% private business in cases where it is done exclusively by the private sector,” she said. Ms. Tretyakova also expressed doubts that Ukrainian insurers have sufficient assets to cover large war risks.

The conference also discussed:

• Problems of tax residency for Ukrainians who were forced to go abroad
• Possibilities of denouncing some ILO conventions that Ukraine cannot implement
• Concept of reforming the national classifier of Ukraine “Classifier of professions” (draft law No. 9630)
• Economic activity of households without registration of individual entrepreneurs

Following the discussion, the participants reached a common opinion on all the issues discussed and agreed to further cooperate on the implementation of the relevant projects.