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Six Myths About the Simplified Tax System, Or Why It Makes No Sense To ‘Hunt a Mice’

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CASE Ukraine`s Senior Economist Volodymyr Dubrovsky wrote for the ‘Ekonomichna Pravda’ (‘Economic Truth’) media outlet about the intensification of the simplified tax system opponents` activities.

In recent times, simplified tax system`s (STS) opponents have become more active.

We have identified the six most prevalent, malicious myths, which these opponents use. We convincingly explained, why they are wrong. Click on the ‘myth’ text you are interested in to get a detailed description.

Myth 1: The simplified system is the benefit. The budget loses tens of billions because of it. If it is canceled, you can collect more taxes and to direct it, for example, for increasing pensions and salaries to state employees.

Myth 2: ‘Simplified tax system’ is mainly used for tax evasion. Tax evasion is, basically, the ‘simplified tax system’.

Myth 3: We do not know the real simplified tax system users` turnover. They do not keep the books, the majority of them do not own cash registers, they all exceed their limits. In fact, it may not be not 7%, but 70% at all.

Myth 4: All the contraband and the ‘black’ good are transferred through the simplified tax system users, because they can sell without providing receipts for tax purposes and maintaining inventory control. The main thing is to compel everyone to install cash registers. Then all the problems, including those described above, will be solved in one fell swoop.

Myth 5: The West demands the abolition of the simplified tax system because it exists nowhere in the world. Since Ukraine is dependent on loans and aid, it cannot be helped – we are forced to abolish it.

Myth 6: It is necessary to cope with the evil we can reach: since we do not have the stomach to block the offshore flows, we can make small businesses work fairly.

Read the full article [in ukrainian]

February 13, 2017