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New legislation may lead to a loss of 1% of the country's GDP, experts warn.
The Verkhovna Rada, Ukraine's parliament, on January 16 passed bill No. 1210 to amend the Tax Code of Ukraine on Improvement of Tax Administration, Removal of Technical and Logical Mismatches in the Tax Legislation.
Ukrainian businesses have already branded the draft law as "tax terror bill".
During the work on the bill, the Rada committee took into account a number of amendments, while rejecting key ones that would have prevented a blow to businesses," said Nina Yuzhanina, who is a member of the Committee on Finance, Tax and Customs Policy.
Among the major innovations are the new rights of tax officials to "adjust" financial performance figures of companies to increase tax payments, as well as an additional 18% tax on the profits of IT companies received from abroad, and increased rent for gas and ore production, discrimination against foreign investors due to taxation of exchange rate differences, RBC-Ukraine wrote.
Tax authorities will be entitled to increasing exporters' tax payments – at the expense of the so-called "business purpose rule," which could significantly affect Ukrainian exports, including to the EU.
Tax fines will increase dramatically (in many instances, by four times) for businesses.
At the same time, inspectors of the State Tax Service will be absolved from liability for wroongfully calculated taxes and fines.
"The powers are being unjustifiably expanded of the State Tax Service – an uncontrolled body without a strategy. At the same time, officials with some Tax Service Departments shove certain norms to the MPs right from under the rug," Nina Yuzhanina said.
New legislation may lead to a loss of 1% of the country's GDP, that is, some UAH 36-37 billiom, economists say.
Almost all major business associations and those of Ukraine's foreign investors, including the European Business Association, the American Chamber of Commerce, the Ukrainian League of Industrialists and Entrepreneurs, the Federation of Employers of Ukraine, and many others back in November 2019 spoke against the bill.
It should be recalled that on this day six years ago, the Verkhovna Rada under the influence of the Party of Regions, controlled by the then-president Viktor Yanukovych, passed the package of laws dramatically restricting rights and freedoms of Ukrainian citizens, including to peaceful rallies, and affecting mass media. The laws sparked mass protests and were abolished within a month.