Businesses in Ukraine have long complained that they face pressure from the tax authorities that makes it impossible to operate normally. One of those who is not afraid to speak out about the problems created by tax authorities and the chairman of the Verkhovna Rada Committee on Finance, Tax and Customs Policy, Danylo Hetmantsev, is Yana Matviychuk, a volunteer, founder of the creative agency ARENA CS, and member of the Young Business Club board.
UNN asked Yana Matviychuk why she considers the tax authorities to be a termite, what problems entrepreneurs in Ukraine face, and what consequences Hetmantsev's tax policy will have for the economy in the future.
- You are doing business in Ukraine. Please tell us what problems you have encountered with the tax authorities
Let me start by saying that the tax system in Ukraine is very complex. To pay taxes honestly and correctly, you need to have a whole staff of accountants. But even experienced accountants cannot always help with such issues as, for example, blocking tax invoices. This is one of the most painful issues because it directly delays or even paralyzes our work.
In addition, it is very difficult to work in an environment where my company pays taxes properly, but on the other side there are thousands of tax officials who are constantly looking for something to dig into. Such excessive control and scrutiny is due to the fact that the tax office creates a lot of control operations to at least somehow justify the number of people working in this tax office.
We also have to constantly monitor updates and changes in tax legislation. Hetmantsev regularly comes up with new ways to "skin the goose". The tax legislation is tangled like an old Chinese New Year's garland, which Hetmantsev does not try to untangle - he tears it up and wants it to work. Moreover, no one forbids Hetmantsev to do so. Civil society is unable to remove him from his position, although this has been discussed for a long time.
My company ARENA CS paid over UAH 40 million in taxes in 2023. Fortunately, we don't have any serious problems with the tax authorities, but this is only possible because an entire department of accountants is responsible for paying taxes and making them on time. In my opinion, this is the only way to do business in Ukraine without falling victim to the tax authorities. But we are not immune from tax audits or anything like that.
- Are entrepreneurs experiencing increased pressure from the tax authorities now, given the blocking of tax invoices and the resumption of inspections? How to deal with it?
The tax authorities are now putting a lot of pressure on businesses. And while medium and large businesses can afford accountants to handle all tax-related issues, small businesses have to deal with it themselves. Hetmantsev's current tax policy will lead all small businesses in Ukraine into the abyss.
The pressure from the tax authorities is also evident in the fact that Hetmantsev has returned 20% VAT, restored tax audits, cash registers, and is in favor of abolishing the single tax. But the war is not over yet! Business in Ukraine is already on the verge of survival, with entrepreneurs leaving the country and the tax authorities making things even worse. Just imagine, in 2023 alone Ukrainians in Poland opened 30 325 new companies. I am sure that if the tax authorities eased the pressure and reduced taxes, all these businesses could exist in Ukraine. Yes, perhaps they would have relocated to the rear regions. But they would still work for the Ukrainian economy, not the Polish economy.
If all these 30 ,000 companies operated in Ukraine, thousands of Ukrainians would remain working here. As of September 2023, the number of officially employed Ukrainians in Poland was 1.13 million. This is a loss for Ukraine. Currently, 10% of Ukrainians who left because of the war do not plan to return to Ukraine for permanent residence, even if the fighting ends.
The tax authorities are literally destroying the Ukrainian nation by blocking invoices and returning audits. People do not want to work in Ukraine, they see no prospects for development. As a result, they are leaving the country.
The current tax policy does not work for economic development, but for filling the state treasury. As we understand it, if the tax burden increases, it means that the budget gap grows. However, Hetmantsev and his company are not familiar with the theories of economic growth, according to which economic development is possible only if tax policy is liberalized, deregulated, the state is withdrawn from the economy, and the state apparatus and state functions are reduced.
I believe that because of Hetmantsev's economic policy, the tendency for the economy to shrink and businesses to close will continue.
- Are you actively involved in volunteering, or do you feel that businesses are now less likely to donate and help the military? In your opinion, is this due to pressure from the tax authorities?
Businesses in Ukraine are suffering greatly because of the war, but despite this, they continue to donate and volunteer. In fact, it is very difficult. If the tax system were simplified and, for example, businesses switched to a simplified system of paying a single tax of 5-10%, the money saved on administering complex taxes would still be donated to the army. And the argument here is clear: unlike corrupt officials, business is well aware that it needs to support the Armed Forces, volunteers, and volunteers, because the fall of the front means the complete fall of the country. The business understands its responsibility for this and owes its existence to all those who are now bringing Ukraine's victory closer.
At the beginning of the full-scale invasion, our team was directly confronted with the fact that customs officers demanded bribes and took a long time to conduct inspections. This is the kind of bureaucracy that Hetmantsev had been nurturing even before the full-scale invasion. He wanted more taxes, like a big but stupid child of a skinny mother who can't get enough milk while her mother is falling apart. Publicity and the Russians near Kyiv somewhat eased this burden, but it did not disappear. And now it is only getting worse.
- More and more often, experts say that Hetmantsev is the gray cardinal of the tax service and manually controls it. Do you agree with this statement?
I assume that this is the case. I can't say that Hetmantsev makes key decisions, but he definitely has some power and influence over the tax office.
And, in fact, it is very difficult to trust a person who was an assistant to FSB agent Sivkovich for 8 years, who, by the way, is now hiding in Russia. Didn't Hetmantsev know about Sivkovich's ties to the FSB? I don't believe so. After 8 years, even the most inattentive person would have suspected something.
- Recently, in one of your blogs, you wrote that Hetmantsev's tax policy is destructive for the Ukrainian economy and that the tax service is a termite. Please tell us more about it.
For me, Ukraine is now like a large ecosystem in which everyone has to work for the victory and destruction of the enemy. But, as in every natural ecosystem, we have pests. In Ukraine, these pests are corrupt officials and tax authorities. And while corrupt officials can be fought and there is a chance that they will be brought to justice, tax officials commit lawlessness in the legal field. And this is more difficult. Tax officials are like termites, gnawing holes in the economy, in business and in the pockets of ordinary Ukrainians. Tens of thousands of tax officers do not create money inside the country, do not contribute to economic growth, but only harm and devour everything available. They exist on our money. This is a resource that could be used, for example, to provide for the military. But it is used by termite tax collectors.
- Why don't entrepreneurs openly oppose Hetmantsev's destructive policies now? Are they afraid of even more pressure or are they simply moving to the shadows
Hetmantsev's approach to tax policy is severely hampering the Ukrainian economy. Officials are changing, top leaders of various government agencies are resigning, but Hetmantsev is sitting still. Public criticism and protests by individual entrepreneurs have not affected him. That is, someone is very interested in keeping Hetmantsev where he is.
It seems to me that it's not the fear of tax pressure that is holding people back from openly confronting Hetmantsev - it's the fact that it has turned out to be a waste of time. Hetmantsev is someone's protégé, and public condemnation or dissatisfaction does not solve anything now. Everyone knows about Hetmantsev and his tax "works of art," but it takes political will to stop it all.
- What do you think will be the consequences of Hetmantsev's policy for the Ukrainian economy in the future?
Hetmantsev's tax policy will lead to an even greater economic decline. Businesses will go into the shadows, close down, and move to European countries. The goal of the Ukrainian tax authorities' policy is to control, not to grow the economy. And Ukraine needs economic growth today, and the tax policy should be stimulating to open more businesses in Ukraine. More businesses mean more taxes and more resources for defense. Today, the economic policy of Ukrainian officials is aimed at destroying the economy.