Business Ombudsman's position on the Government's plans to raise taxes

Almost two weeks have passed since the government 'sdraft law, which, among other things, proposes to raise taxes,was registered in the Verkhovna Rada . Although the business community is sympathetic to the need to increase funding for Ukraine's defense, after the text of the draft law was published, specialized experts (theAmerican Chamber of Commerce in Ukraine, the Center for Economic Strategy, and other think tanks) constructively criticized it.

Thus, the lion's share of revenues is proposed to come from two sources:

• 1% of the military fee from the income of legal entities on the general system (in fact, it is a turnover tax in addition to the existing income tax),
• an increasefrom 1.5% to 5% of the military tax on personal income.

Thus, the draft law creates conditions for disproportionate pressure on bona fide businesses and employees. At the same time, the new type of turnover tax will complicate the already difficult administration of taxes and fees, creating new corruption risks.

Without delving into the discussion of ways and sources of budget revenues, the Business Ombudsman Council draws the attention of lawmakers to the conclusions that formed the basis of the Council's two recent investigations on its own initiative. The Council calls for the following recommendations to be taken into account in further legislative changes:

1) Analysis and forecasting.Before adopting any changes (in its own investigation on the SECR, it was about the procedures for registering TI/ SA, but this rule can be considered universal), it is necessary to conduct a thorough analysis and forecast the impact of the proposed changes, especially the possible negative consequences for business, based on actual data. It is important to carry out not only mathematical calculations, but also modeling of potential reactions of both bona fide and unscrupulous businesses, complexity of administration, etc.

2) Implementation of the principle of "consulting first", the main purpose of which in itsown investigation of tax audits is timely and constant communication with taxpayers. As the reaction of business and the expert community has shown, gross miscalculations could have been avoided if we had first held discussions with our experts, who are trusted by both the Ministry of Finance and the relevant committee of the Verkhovna Rada.

The restoration of trust in the fiscal authorities, declared in the National Revenue Strategy, should be based on openness and clarity of decisions.

In this regard, the official response of the Ministry of Finance to the Business Ombudsman Council on the impossibility of involving our specialists, as well as any other external experts, in the audit of the PCIS system (initiated by the decision of the National Security and Defense Council of Ukraine (NSDC)) is eloquent, only because the Council lacks the status of a central executive body. Consensus is built by openness.