Does Hetmantsev want to leave Ukrainians without high-quality and affordable Internet during the war? MP decided to fight with providers

The head of the Verkhovna Rada Committee on Finance, Taxation and Customs Policy, Danylo Hetmantsev, has decided to declare war on Internet providers using the simplified taxation system. According to the MP, these entrepreneurs pay too little tax. In response, the Internet Association of Ukraine called on President Volodymyr Zelenskyy to protect them from the arbitrariness of Hetmantsev, who may play along with foreign players, UNN reports.

In his column for Glavkom, the head of the Tax Committee, Danylo Hetmantsev, wrote that it is common for Internet service providers operating in Ukraine to register as individual entrepreneurs to reduce their tax burden. According to him, such providers pay taxes under a simplified system.

"The average income per user of fixed-line services is UAH 219 (versus UAH 102.1 for mobile). So it is clear that the fixed-line and Internet segments could not help but take advantage of the opportunity to massively disguise themselves as individual entrepreneurs. After all, the benefit is undoubted - receiving UAH 219 of income from one user, when using the simplified taxation system, only UAH 10.95 (!!!) of taxes are paid, while the tax burden under the general system would be UAH 75.34 - seven times higher," Hetmantsev wrote.

At the same time, the MP believes that the industry is rich enough to pay more taxes.

"The industry is quite rich, and in conditions when it remains stable due to frequent power outages, it has additional advantages and, accordingly, revenue growth. In 2023, total revenues from fixed-line services amounted to UAH 21.2 billion, an increase of 33.3% compared to the previous year (for comparison, mobile operators' revenues amounted to UAH 61.7 billion, with an increase of only 9.8% compared to 2022)," Hetmantsev wrote.

Following these statements by the head of the Rada's tax committee, the Internet Association of Ukraine asked the President for protection and called on him to stop the campaign to destroy small domestic telecom businesses.

"The Internet Association of Ukraine calls on the state to implement the law. There should be no collective responsibility of the entire industry for the fact that someone is "mimicking" someone else (especially if this "mimicry" itself does not violate the law, but simply interferes with someone's business). The state has all the mechanisms to legally close such "loopholes" rather than eliminate the legal possibility of using the simplified taxation system for an entire industry and thus kill the entire small domestic telecom business to benefit large players with foreign owners, acting to the detriment of their interests. After all, we are moving towards the EU, where such a way of "supporting" small and microbusinesses is categorically unacceptable," the open letter says.

The EBA also drew attention to the fact that in recent months some officials and politicians  have been trying to illegally cancel the legal right of small businesses - Internet access service providers to use the simplified taxation system.

The UAA added that there have already been a number of court decisions in favor of domestic operators challenging illegal decisions of the tax authorities.

"Unfortunately, recently, top politicians have joined the efforts to protect the interests of foreign owners of large telecom businesses in the seizure of the Ukrainian electronic communications market. The EBA argues that such actions against small domestic telecom businesses are groundless and unjustified and asks the President to intervene in the situation, to assess the actions of the relevant politicians and officials who are consciously or unconsciously destroying a critical sector of the domestic economy during a difficult war," the association emphasized.

At the same time, Mykola Kucheruk, director of the Elit-Line Internet provider from Kramatorsk, said that small and medium-sized Internet providers, which Danylo Getmantsev opposes, provide the population with Internet better than large players in the market in the face of a large-scale Russian invasion and blackout due to Russian shelling.

"Let's answer a simple question - if 4 operators have invested 70% of capital investments, why does Kyivstar's Internet not work during blackouts? And what about Volia? If such large amounts of investment are made, why do a bunch of "gray operators" that Hetmantsev dislikes so much  have queues for connection almost until the end of the year? And does the Internet work for major players after shelling and how quickly do they restore it? Again, from my own experience in 2014 and 2022-24, I can safely say that all the major providers from the top 10 are in no hurry to restore optical lines after force majeure, such as arrivals... Moreover, the big players started investing in PON technology only when thousands of subscribers started disconnecting from them because the Internet was down. And for small individual entrepreneurs and LLCs, it worked," Kucheruk wrote  .

Recall

The government submitted to the Verkhovna Rada draft laws on tax increases and amendments to the 2024 state budget. The Cabinet of Ministers proposes to the Parliament to increase the military tax rate to 5%, and for some transactions to 30%. Danylo Hetmantsev , Chairman of the Verkhovna Rada Committee on Finance, Taxation and Customs Policy, supported the government's initiative, noting that he sees no other options than to accept the Cabinet's proposal to raise certain taxes (military duty, excise taxes, in particular on fuel and tobacco), increase the relevant tax base, and place more government bonds, which may also include NBU issuance.

"Yes, this is a bad decision that will hinder economic recovery, the growth of citizens' incomes, and potentially pose risks to macrofinancial stability. However, there is no other way than to close the gap in the military now, because in a few months we will face a significant shortage of funds for the current maintenance of the army, which will begin to deepen sharply by the end of the year," Hetmantsev wrote.

Earlier, Yaroslav Zheleznyak, deputy chairman of the parliament's tax committee, criticized the draft law that provides for tax increases. According to him, it is not clear why such tax changes are proposed and what calculations they are based on.

In addition, mobile operators operating in Ukraine believe that if the parliament supports the government's initiative and raises taxes, it will be a step backwards in the availability of mobile communications, which is critically needed in times of war.

Ukrainians in a pollconducted by UNNadvised the authorities to fight corruption first and foremost, instead of raising taxes. They believe that an increase in the tax burden could lead to a decrease in donor support for the army.

Add

The head of the Rada's tax committee has repeatedly voiced the idea of raising taxes in Ukraine. According to economic expert Yuriy Havrylechko, the elimination of the tax and customs services and the transfer of the economy to martial law may be an alternative    to Hetmantsev's idea to raise taxes to close the budget gap.