On 21 April an online meeting of the leading business associations with the Chairman of the Committee on Finance, Tax and Customs Policy of the Verkhovna Rada Danylo Hetmantsev and officials of the State Tax Service of Ukraine took place. In particular, the Ukrainian Business Council was represented by the Association of Taxpayers of Ukraine (ATU) and the Ukrainian Chamber of Commerce and Industry (CCI).
In the course of the question-and-answer session, the participants raised the issues the business sector faces in its relations with the tax authorities, such as SMKOR inappropriate activity and unjustified blocking of invoices, failure of exporters and importers to fulfil their contractual obligations during the war, VAT refunds, etc.
Opening the discussion, the ATU President Grigol Katamadze, highlighted the need to reduce the burden on the wages fund and impose a capital withdrawal tax. He suggested not to wait for the end of the war but consider the relevant draft law yet now, and adopt it with its entry into force after the martial law decreed lifted.
‘Let’s adopt this law in the times of war, and provide for its implementation after the war ends with transitional provisions. We need business not to flee the country, but to know that after the war ends there will be good conditions for doing business and its employees. In that case they will stay and return home’, Grigol Katamadze said.
Chairman of the Committee on Finance, Tax and Customs Policy of the Verkhovna Rada Danylo Hetmantsev declared his support to reduce the burden on the wages fund, but in the current circumstances it is impossible to reduce taxes. He also mentioned that it is being planned to reduce the burden on the wages fund as a part of the tax reform in line with the EU taxation model.
‘According to the Memorandum with the IMF, in the current year we have to develop an income strategy by 2030 at the Ministerial level. We will all be engaged in this process. And this strategy will be devoted to the tax reform aiming at finding balance between state budget revenues and stimulating economic development after the war ends. I hope that such meaningful ideas as reducing burden on the wages fund based on both logics and compensators will be taken into account. I will do my best to ensure that changes related to the burden on the wages fund are included in the post-war period strategy’, Danylo Hetmantsev said, adding that his draft law initiative to reduce the burden on the wages fund from the current 25% (effective rate) is ready.
Talking about the SMKOR activity (system for monitoring the compliance of tax invoice/adjustment calculation with risk assessment criteria), Grigol Katamadze suggested the tax officials to make the full statistical data on judicial decisions in terms of risky companies public in order to evaluate the system efficiency, in particular won and lost judicial cases by the STATE TAX SERVICE.
The STATE TAX SERVICE officials declared that at present they make public only the number of court decisions, both pending and executed, and ensured they will be working on the statistical data extension.
In total, in March the rate of tax invoice blocking made up 0.79% which is less comparing to September 2022 before the SMOKR work algorithm was changed, while in April the rate fell down up to 0.69%.
In a few days we are expecting for the second part of amendments to the Governmental Resolution No. 1165 drawn up together with experts and representatives of business. This should also have significant impact on the number of blocked tax invoices. It is not our plan to give up blocking tax invoices, but we plan to intelligently improve the blocking system to focus only on risky enterprises and make the system stand clear of law obedient business operators’, Danylo Hetmatsev said.
The First Vice-President of the Ukrainian Chamber of Commerce and Industry Mykhailo Nepran commented the situation on the issue of Force-Major Certificates to business operators.
He declared that he had previously offered to introduce the relevant mechanism for currency control, but this initiative was not supported, so at present we are face a problem.
We have thousands of exporters who had agreements before 24 February 2022 and are now suffering from failure to make payment, inability to deliver the goods when the ports are blocked, and logistics failure. It is time for currency control. The situation with the russian federation is more or less clear – any transaction is explicitly banned there, while the situation with Belarus is more complicated: there is not a single regulatory act prohibiting business relations between Ukraine and Belarus. But at the same time, customs and checkpoints are not working. The NBU adopted a resolution prohibiting settlement in the russian and Belarusian roubles. Payments in other currencies are also not accepted. Since there is no prohibition against business activity, those who had worked with Belarus can’t get a Force-Major Certificate. Besides, the Ukrainian exporter can’t even apply to the court. Therefore, I suggest the Cabinet of Ministers to adopt a resolution prohibiting business activity (same as they did with russia) and we will have the grounds for the Certificate issue; or get back to the same deadlines for receiving revenue under the contracts entered into before 24 February 2022 for a half-year or a year more’, Mykhailo Nerpan said.
Danylo Hetmatsev suggested the CCI and the Federation of Employers of Ukraine to finalise the proposal and submit to the Committee.
At the end of the discussion the participants came to the mutual agreement on all issues and agreed to jointly work on the relevant projects.