The European Business Association, which regularly evaluates the Tax Index, notes that the number of complaints from Ukrainian business representatives about unreasonable information requests and artificial blocking of tax invoices has increased significantly over the past year. This is stated in the EBA's response to the request of UNN.
The EBA reported that in 2023, the Tax Index value was 2.85 points out of 5, according to the EBA tax experts. Two years ago, for the first time in the history of the study since 2011, the index received a neutral value (3.01 points), but over the past two years it has slightly decreased. Currently, the index is in the negative plane.
The index consists of four equivalent components, namely the quality of tax legislation; burdensomeness/ease of tax administration; fiscal pressure; and quality of tax services. This year, the lowest score among the index components was given to the quality of tax legislation. According to the respondents, constant changes, contradictions and ambiguities, as well as its complexity, have the greatest negative impact on the quality of legislation. The highest score was given to the fiscal pressure factor, although businesses report an increase in fiscal pressure compared to last year. Similar dynamics in the assessment of the index components have been observed over the past two years
Among the manifestations of fiscal pressure in the latest wave of the survey, businesses highlighted unreasonable interpretations of tax legislation by regulatory authorities, as reported by 64% of respondents.
"In addition, over the past year, the number of complaints about unreasonable information requests and artificial blocking of tax invoices has increased significantly," the Association said.
In 2023, companies most often complained about the blocking of VAT invoices, with 52% of survey participants reporting this problem. Other difficulties include non-compliance with the terms of currency control in foreign trade and the application of penalties, problems with obtaining a VAT refund, as well as violations by the tax authorities in conducting inspections (in particular, in the field of excisable alcohol and tobacco products, excisable fuel, cash registers/PTRs). However, as the EBA clarified, these difficulties were inherent in a minority of companies.
The EBA notes that taxes have a significant impact on the country's investment climate.
"For an investor, it is not only the level of taxes that is important, but also their clarity, ease of administration, work within the legal framework, and timely notification of any changes. That is why we strive not only to make the necessary changes and improvements to the legislation, but also to make the tax system more business-friendly, to help build transparent communication and interaction. So that business can focus on its work and development, and not waste time and effort due to bureaucracy or illegal actions of government agencies," the EBA emphasized.
The EBA added that every year they prepare and update recommendations for business to improve legislation and the regulatory framework, in particular, an important role is given to tax issues. In particular, we are talking about proposals for legislative changes in the field of personal income taxation, proposals for measures to avoid double taxation of Ukrainian citizens' income, proposals to clarify the tax legislation of Ukraine on the application of the rules on controlled foreign companies, improving the functioning of the Unified Register of Tax Invoices, some issues of taxation of charitable assistance to enterprises, certain issues of penalties, and much more.
Recall
Blocking of tax invoices is one of the main problems that Ukrainian entrepreneurs complain about in the field of tax administration. Overall, according to the Business Ombudsman Council's statistics , 57% of complaints from business representatives in the third quarter of 2023 were related to tax issues. According to Business Ombudsman Roman Vashchuk, the problem for business is not even the level of taxes, but the style of administration. He also added that the tax and customs authorities lose 90-94% of their cases in courts.
According to experts, this situation with the courts indicates that the tax authorities are abusing their powers, as the courts are breaking down these decisions. Some, such as economic analyst Pavlo Sebastianovych, directly calls it "schemes.
Among the main such schemes, he names fictitious exports, registration of fictitious VAT from fictitious companies, export of goods under fictitious documents with fictitious VAT and refund of real VAT, twists, blocking tax invoices, granting risky status to an enterprise and organizing shadow schemes to remove this status.
Dmytro Oleksiyenko, a member of the Taxpayers Association Board, believes that MP Danylo Hetmantsev, chairman of the Verkhovna Rada Tax Committee, is behind this administration policy, because no important decisions are made at the State Tax Service without his knowledge. And he actually runs the tax office through his former assistant Yevhen Sokur.
At the same time, Mr. Hetmantsev called his activities in relation to the tax service "parliamentary control." He also rejected accusations that he was taking over the powers of the executive branch, saying that he was simply helping entrepreneurs.