Single Tax and Tax Burden: Businesses Provide Proposals for Recovery Strategy

The conference "Strategy for Recovery, Sustainable Development and Digital Transformation of Small and Medium-Sized Enterprises until 2027 - Business Vision" was held in Kyiv. It was attended by representatives of leading business associations, MPs Oleksiy Movchan, Ihor Marchuk, Yaroslav Zheleznyak, Deputy Minister of Economy Oleksiy Sobolev, Business Ombudsman Roman Vashchuk, and experts from analytical centers. The discussion focused on developing joint proposals of business and think tanks to the Strategy for Recovery, Sustainable Development and Digital Transformation of Small and Medium Enterprises until 2027.

The event was organized by the Ukrainian Business Council, the Chamber of Commerce and Industry, and the United Nations Development Program (UNDP) in Ukraine with the support of the Swiss government. Analytical partner: Economic Expert Platform.

"Themain goal of our meeting is to involve the business community as much as possible in the work on the SME Recovery Strategy until 2027.We are working further on supplementing and approving the document, which will define a clear common strategy that will be supported by business. It isnot effective to change course every six months, no economic power can withstand such an overload," saidGennadiy Chyzhykov, President of the Ukrainian Chamber of Commerce and Industry, which hosted the conference,opening the meeting .

"The conference summarizes a series of events aimed at developing business proposals for the SME Strategy 2024-2027, held with the support of international partners ," saidMykhailo Nepran, First Vice President of the Ukrainian Chamber of Commerce and Industry,moderator of the event .

Maksym Boroda, UNDP Ukraine's Project Manager of the Strengthening Member Business Associations of Micro, Small and Medium Enterprises Project, said: "Proposals for the draft Strategy were developed by more than 50 business associations, which are backed by tens of thousands of entrepreneurs they represent. The SME Development Strategy should ensure the subjectivity of business associations and see them as effective representative partners of the Government in the development of small and medium-sized businesses."

Viktor Shutkevych, Deputy Director/Project Coordinator of the Swiss Cooperation Office in Ukraine, emphasized: "The Embassy of Switzerland continues to provide significant support to Ukrainian small and medium-sized businesses. This support is focused on such areas as Ukrainian exports, support for the relocation of enterprises, and cooperation with commercial banks to obtain grants for small and medium-sized businesses."

Theconference participants discussed the results of research and proposals for the SME Strategy 2027 jointly developed by think tanks and business associations, which were presented by representatives of leading think tanks - Dmytro Boyarchuk, Head of CASE Ukraine, Oleg Getman, Coordinator of Expert Groups of the Economic Expert Platform, and Andriy Dligach, Chairman of the Board of the Coalition of Business Communities for the Modernization of Ukraine.

Roman Vashchuk, Business Ombudsman of Ukraine, noted that the reboot of the State Tax Service of Ukraine, the State Customs Service of Ukraine and the Bureau of Economic Security of Ukraine is of utmost importance today.

Yaroslav Zheleznyak, First Deputy Chairman of the Verkhovna Rada Committee on Finance, Taxation, and Customs Policy, emphasized that it is important for MPs to receive feedback from business on key projects. He also emphasized the importance of rebooting the three state executive bodies - the BES, the State Tax Service, and the State Migration Service - with the decisive voice of international experts.

Ihor Marchuk, MP, Chairman of the Subcommittee on State-Business Interaction and Investments of the Verkhovna RadaCommittee on Economic Development, drew attention to the following aspects:

• The need to recognize at the highest political level the importance of entrepreneurs, their contribution to employment growth, innovation and technological development, the welfare of local and regional communities and economic prosperity in general;
• The importance of applying differentiated policies, mechanisms and means of state support for MSMEs, taking into account the categories of enterprises (micro, small, etc.);
• The need for comprehensive economic mobilization (economization) of society for the purpose of self-organization and self-development, acquisition of skills necessary for entrepreneurs to start their own business, as well as promotion of self-employment as an attractive career option;

The discussion was attended by government officials, MPs, and business representatives.

Deputy Minister of Economy Oleksiy Sobolev assured that all common business priorities could be added to the Strategy . To do this, business associations should create a single document.

Joint proposals of business associations and think tanks that should be added to the Strategy were presented and discussed at the conference:

1. Interaction between business and government, inclusive process of working on regulations, full cycle of state policy making. Business associations should become subjects of strategy implementation and objects of strategizing.
2. Public services should be implemented through private business; utilities should be prohibited from being project implementers (they should be customers only).
3. Modernization of public-private partnerships (draft law No. 7508)
4. Civil service reform, including the introduction of accountability of the state apparatus' leadership; restoration of transparent competitions and public control over open competitions for key government positions.
5. Minimizing the effects of the labor shortage: quality booking, access to booking for SMEs, launch of e-booking, business trips abroad for SMEs.
6. Accelerate the growth of wages, bringing them closer to the level of neighboring countries. To do this, the burden on the payroll should be reduced to 25% in total.
7. Interaction with inspectors and law enforcement agencies; rejection of the dominance of "fiscal expediency" over economic expediency.
8. Institutional reform of inspection, control and law enforcement agencies and the judiciary. Re-election of the leadership of the State Tax Service, the State Customs Service, and the Bureau of Economic Security by international experts, and re-certification of all personnel (draft laws No. 10088, No. 6490d, No. 9243).
9. Maintaining the current simplified taxation system, promoting legal micro and small businesses. Replacing the total fiscalization of the 2nd and 3rd groups of the simplified system with fiscalization exclusively for certain risky groups of taxpayers who have a significant risk of exceeding the limits of the Single Tax. Simplified regime for self-employed persons (draft law No. 10166). Raising the threshold for switching to VAT.
10. Simplification of business conditions: liberalization of market legislation (draft law No. 5473d), the law on internal trade and implementation of the EU directive on the interaction of producers and retailers.
11. Simplification of business conditions, optional certificates of work/services, abolition of ineffective and burdensome state control regulations (Draft Law No. 5837)

The meeting participants reached an understanding on all the issues discussed and agreed to continue working together on the draft Strategy.