Taxmen`s Dreams. Whom, And Why Is It Profitable To Destroy Simplified Tax System?


IMF should understand that even after eliminating simplified tax system, there will be no significant revenue increase. It is claimed by CASE Ukraine`s Senior Economist Volodymyr Dubrovsky in an expert column for ‘Delovaya Stolitsa’ (‘Business Capital’) media outlet.After persistent assaults from all sides on a simplified tax system for small businesses the well-informed experts as well as representatives of the entrepreneur movement have developed a healthy Pavlov`s reflex. It results in an instant response in conjunction with a serious skepticism regarding the reality of such attacks.

Although we should admit that guerrilla attacks against simplified taxation sometimes reach the goal. For instance, it happened after the introduction of the mandatory use of Cash Registers when selling major (domestic) appliance (it will not go into effect until a list of such equipment is approved) and a minimum wage increase. The last has, in addition to other troubles, automatically doubled taxes for the ‘second group’.

The latest news as for today was the draft memorandum with the IMF. Allegedly it implied the complete abolition of the simplified system in 2018. It would be a real disaster, given that fact that the previous similar attempt in 2010 was worth to Ukraine`s economy of 2 million legal jobs.

This decision mostly centers around reforming the common system taxation. If a capital transfer tax (‘distributed profit’)  will be introduced instead of the discretionary (ie corruptive) income tax (as it is already provided by a newly adopted law №1797; only foreign trade operations, which today allow to withdraw billions of dollars with impunity and tax-free, will be subject to control), many small businesses, that have grown out of simplified taxation, will go to the general tax regime without being left to the tender mercies of the Tax Office chiefs, and they will minimize their schemes.

Read the full article [in ukrainian]

January 25, 2017