How business assesses the Ukrainian taxation system: survey results
The integral score of the Tax Index has decreased to 2.64 points out of 5 possible and continues to be negative (2.85 points in 2023). These are the estimates of the new wave of the Tax Index survey in 2024, conducted by the European Business Association and EY Ukraine.
Overall, 59% of tax experts rated the current tax regime in Ukraine as satisfactory, although 36% believe that it hindered business development and investment, and only 5% believe that it helped their business.
The quality of tax legislation received the lowest score among the factors that influence the calculation of the index, just like last year - 2.46 points (in 2023 - 2.63). Half of the respondents, namely 52%, consider it satisfactory. At the same time, the share of experts who consider tax legislation to be of poor quality has increased from 39% to the current 43%, while the number of those who consider it to be of high quality has decreased from 9% to the current 5%. According to the respondents, constant changes, contradictions and ambiguities, as well as its complexity, have the greatest negative impact on the quality of legislation.
44% of respondents consider the procedure of tax administration and preparation of tax reports to be burdensome. This year, this factor received a score of 2.62 points. At the same time, 41% rate this procedure as satisfactory and only 15% consider it easy (17% in 2023).
Respondents complain the most about the amount of time spent on preparing tax returns and paying taxes, the hasty introduction of new rules and insufficient time to adapt to them, and their lack of clarity. It is worth noting that these factors that negatively affect the experience of preparing and submitting reports have remained unchanged in recent years.
The assessment of the quality of tax services has also decreased - from last year's 3.03 to the current 2.79 points. Only 20% are satisfied with the quality of tax services (31% in 2023), 37% are dissatisfied (21% in 2023). Another 43% rate the quality of tax services as satisfactory.
According to 31% of respondents, it was easy for them to contact the tax service (last year the number was 46%), while 25% found it difficult to do so. In 11% of the surveyed companies, the issues were resolved in a satisfactory manner, in 70% - partially.
Survey participants reported an increase in fiscal pressure on business compared to last year. Among the components of the index, it was the assessment of fiscal pressure that showed the largest decline, although it remained quite high compared to the other components. Accordingly, the fiscal pressure score decreased from 3.07 to 2.7 points. Only 7% of respondents did not feel any pressure on their company in 2024, while 14% felt almost no pressure. At the same time, 41% report significant fiscal pressure, 38% - moderate.
Traditionally, among the manifestations of fiscal pressure, businesses have identified unreasonable interpretations of tax legislation by regulatory authorities - 78% of respondents report this. The number of complaints about unreasonable information requests (64%) and artificial blocking of tax invoices (30%) has increased significantly. Tax audits are reported by 33% of the surveyed companies.
"Unfortunately, the assessment of the taxation system reached a neutral score only once, in 2021. Studies for all other years showed a negative assessment of the state of affairs in taxation by businesses. The anti-leaders were and remain the quality of tax legislation and the complexity of administration. We believe that improving the state of affairs in these areas is within the power of the relevant government agencies and should be a priority for them. Business and the public will be happy to contribute to this activity," comments Natalia Artemchuk, Manager of the EBA Tax and Customs Committees.
For reference:
The EBA Tax Index has been conducted since 2011.
The Index consists of four equivalent components: quality of tax legislation; burdensomeness/ease of tax administration; fiscal pressure; and quality of tax services.
The current wave of the survey involved 81 tax and finance professionals from EBA member companies. The survey was conducted from November 25 to December 11. The survey partner in 2024 is EY Ukraine.