Ratings Cannot Be Trusted


Ukraine has climbed in the ‘Taxation 2018’rating from the 84th place in the 43rd (among 190 countries). CASE Ukraine`s Senior Economist Volodymyr Dubrovsky shared in a commentary to the ‘From-UA’ media outlet a restrained assessment of the successes and called not to rely entirely on similar studies.

In his opinion, positive results with taxation in Ukraine are shown only for the reason that it has a weak link with real problems in the tax system.

The improvement has taken place due to the fact that the rating reflected changes in 2015 – namely, the reduction of the wage tax rate to 22%. These are really important and very positive changes, and they should not stop.

Those changes, which, for example, have taken place this year – when we have finally established more or less normal automatic refunds of export VAT – they are unfortunately not reflected there, because the rating is made so that the only parameters are visible which are usual all over the world, so that it can be compared with different countries, the expert comments.

Positive changes in the tax area are continuing, but there are problems with tax invoices blocking, and these issues will not be reflected in the rating.

According to the expert, there are also very few unregistered small businesses in Ukraine, and its role in the economy is very tiny, in comparison with the developed countries.

There are a lot of small entrepreneurs, and even small violations (in monetary terms) are perceived as massive and large.

The next year, if the law replacing the income tax by the capital transfer taxis is finally adopted, that, it will very seriously alleviate the business situation in reality. Only in this case such a concept as ‘checking the financial result’ may disappear, and maybe it will affect the rating, the economist concludes.

November 22, 2017