Government should introduce tax legislation changes in 2017 – EBA

She said a delay in the introduction of new tax rules would ensure the stability and predictability of the business environment, which is currently difficult to ensure given the fact that at the end of the year companies are finalizing or have already finished the planning of their budgets for the next year, and any changes would lead to uncertainty in the planning process and entail business risks.

"We have said and we continue saying that the most important thing the business expects from the tax reform and the 2016 budget is the balance and rationality with substantial effective and progressive changes. The predictability of the rules is the fundamental basis for confidence-building and comfort of businesses," Derevyanko said.

In her words, the tax reform should focus on improving the tax administration and the state governance.

"Instead of maintaining staff of inefficient officials and the state apparatus, financing useless programs, it would be appropriate to channel budget funds to the automatization and improvement of the tax service operation," she said.

With regard to tax rates, Derevyanko believes that changes should be gradual and predictable.

"Rates should be reduced to a level that will stimulate business activity and bring the economy out of the shadows," the EBA Executive Director said.

"In case of a significant and fast rate reduction while maintaining the level of mandatory budget expenditures, risks of default will soar which will entail the revision of the IMF bailout program," she explained.

When asked about the draft state budget for 2016, Derevyanko noted the budget expenditures have not been significantly reduced due to the unwillingness of the ministries and departments to cut back their spending.

"Many cost items, especially on education and health, will hardly bring about any substantial changes due to the absence of a clear development and reform strategy in both sectors from the relevant agencies," the EBA Executive Director said.

As UNIAN reported earlier, the Ukrainian Finance Ministry published the draft state budget for 2016 and the draft tax reform. The budget deficit is projected at 3.7% of GDP, an increase in social standards by 12%, or in line with the annual inflation, the hryvnia exchange rate of 24 UAH to the dollar. The budget envisages that funding on the defense sector will be increased UAH 100 billion. The proposed tax reform provides the introduction of a flat rate for key taxes – value added tax, personal income tax, corporate income tax, single social security tax – at the level of 20% each, with the moratorium to be introduced regarding any further changes to the Tax Code. The tax reform draft also proposes the elimination of a simplified taxation system for legal entities and reduction in the number of groups of single tax payers.

The International Monetary Fund, Ukraine's key creditor, has not yet scheduled a meeting on Ukraine, signaling that it is waiting for the adoption of a budget for 2016 and amendments to tax legislation in Ukraine, IMF Resident Representative in Ukraine Jerome Vacher told earlier.

The Ukrainian government is holding consultations with the parliament until December 4, inclusive, but MPs are said to be not interested in discussing the draft documents, according to Prime Minister Arseniy Yatsenyuk.

An informed source in the government told UNIAN that on December 4 representatives of the presidential faction would voice their suggestions at a meeting of the National Council of Reforms. It is reported that the parliament and the government should seek a compromise on the above-mentioned documents and register an updated draft on Monday.

President of Ukraine Petro Poroshenko will personally present the document in the parliament, according to the report.