11 Apr 2023 14:28

Post-crisis tax reforms in Ukraine envisage unification with EU norms

MOSCOW. April 11 (Interfax) - The primary objective of Ukraine's post-crisis tax reform is the Ukrainian integration into the European Union, head of the Ukrainian Verkhovna Rada Committee on Finance and Tax and Customs Policy Daniil Getmantsev said.

"It's a mess. And this mess can be cleared by a known recipe, which should be used as soon as possible and I actually urge the prime minister to do this ... I would start the customs reform by reshuffling the leadership and holding an open contest with the participation of international experts," Getmantsev said in an interview with the Ukrainian media.

A prototype of the national revenue strategy, mentioned in the Ukraine-IMF memorandum, is part of the national recovery plan, which was drafted a year ago and concerns public finance, Getmantsev said.

"This implies Ukraine's integration into the EU and implementation of a tax system unified with the tax system of the European Union," he said.

A tangible liberation of revenue taxation, a reform to cut rates and broaden incentives for income declaration by individuals, is possible in this process, Getmantsev said.

The ecological tax and local taxes should also be harmonized with EU laws, he said.

As for the simplified taxation system, an overwhelming majority of EU members have it, Getmantsev said.

"At the same time, none of civilized countries in the world will allow using the simplified system for medium or big businesses - that's the only difference. [...] Nobody [...] is against small businesses, which create jobs for themselves and their families, use the simplified accounting system and smaller or even symbolic tax burden. Yet we cannot agree to a huge store or even a network using the simplified tax system," he said.

There is no way to change the simplified taxation system, except cancellation of the 2% tax, amid the crisis, Getmantsev said.

As reported earlier, the four-year EFF program envisages that the second stage, which is tentatively expected to begin in 2025, will focus the tax and budget policy on crucial structural reforms to guarantee revenue in the medium term through the implementation of the national revenue strategy alongside better management of public finance and reformed public investment management to support recovery processes.

The Ukrainian government tasked the Finance Ministry on March 24 with starting to prepare the national revenue strategy for 2024-2030. According to the Ukraine-IMF memorandum, the strategy will define key principles and tax of the tax policy and administering for both the short term and the post-crisis recovery period, and will lay down steps to be taken for the drafting and implementation of the national revenue strategy.

Later on, the IMF will provide technical assistance in analysis of shortcomings, so that the information could be used in the national revenue strategy roadmap (2024-2030) with a clear definition of revenue and political targets, alongside guidance for coordination between government agencies, donors, the private sector, and civil society under the supervision of the Finance Ministry. This work is due to be completed by the end of June 2023, while the final strategy will be adopted by the end of 2023.

According to deputy chief of staff of the Ukrainian Presidential Office Rostislav Shurma, the national revenue strategy will primarily be determined by the tax model concept.

"This is the concept we have proposed and will be discussing in some amended form with both the government and the IMF," Shurma said on the sidelines of the Ukrainian Tax Reform and Anti-Corruption Summit on March 23.