Oksana Prodan: Ukraine needs a tax compromise

After the EuroMaidan Revolution — also known as the Revolution of Dignity — was over, the Ukrainian business community, which supported it very actively, discovered the new meaning of the old Greek saying: “Be careful what you wish for lest it comes true.” 

The government has changed, and so has the need to play by the old government’s rules, and taking part in the old government’s illegal schemes. But what has not changed is the laws that facilitated the illegal activities, and the people who enforce these laws.

As a result, the businesses that used illegal tax evasion and cashing schemes involving shell companies that had existed with the blessing of the old tax authorities, found themselves outside the law because all their illegal cashing turnover is now in plain sight of supervisory authorities.

And the law states that a taxpayer or business is liable for everything that happened in the last 1,095 days. For many, this not only means bankruptcy, but criminal proceedings.

Many of those companies received a nasty sort of explanation in the form of masked tax policemen paying them a surprise visit, making the managers and owners fear for their businesses, families and their employees. Naturally, those businesses went to the government, which came to power as a result of the will of the people, to seek a solution.

The solution for businesses that used to use the illegal business services offered by people close to former President Viktor Yanukovych is a tax compromise. It will hopefully be adopted by Ukraine’s parliament and signed by the president, and then duly implemented by the Tax Service.

However, this is only a partial way out to reconcile with the past. But what about the present and future of business? Unfortunately, with the exception of coercion to cooperate which has gone along with the old officials, the business environment remains the same. There has been no breath of fresh air even for the smallest of businesses.

There are some 70 supervisory bodies, and the best of these supervisors are searching high and low to secure government revenues in order to finance the army and the special services in the times of war. And of course, they’re searching among the working, healthy businesses that are able to pay up.

For a long time I have puzzled over why business does not openly complain about this enormous pressure and inspections. Is it because they feel they cannot complain about the government which they themselves have propelled to power? Or have they not lost hope yet?

After all, it was the entrepreneurs small and big who gave a helping hand – and money – to Maidan. They did all this to protect themselves and the country, to replace the corrupt system with the one that will ensure transparent and equal conditions for living and doing business in Ukraine.

So far there have been only small changes to the Tax Code which grant tax payers additional rights. The parliament has also voted to cancel 117 permits, simplified the procedure for starting and closing a business, and so on. But the business is yet to feel the effect of this change.

Ok, we have cancelled a recycling fee and the entrepreneurs resumed their work. But this is nowhere near enough. Both the government and parliament need to move decisively to give businesses freedom, ease pressure and incentivize them to create jobs.

What the new government should work on is a complete change of the system, not some half measures.

Oksana Prodan is a parliament member with Ukrainian Democratic Alliance for Reform, led by Vitali Klitschko. She is also head of the National Union of Small and Medium Businesses Fortetsya. 

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