EBA Tax Index improves due to quality of tax legislation in Ukraine

"[Tax] index increased due to the work of the SFS to improve the quality of tax services and administration. This year, the situation with VAT refunds has improved, which is also conducive to the growth of the index. Previously, the VAT refund issue was raised every year. There are no complaints in 2017, which is a big step forward. Also, there were no serious complaints about corporate profit tax," she said after a meeting of EBA representatives with SFS's Acting Head Myroslav Prodan on December 20.

"SFS Acting Head Myroslav Prodan, his colleagues and business representatives are working perfectly to address current issues. We, as the business association, are engaged in regular, planned and proper dialogue with the SFS's senior officials. Our further major task is to continue improving the legislation and tax services provided by the SFS staff to tax payers in the regions," Derevyanko said.

The EBA informs that the country's tax index (2.65 points, within a neutral zone) was compiled based on a survey of 44 tax experts from EBA member companies in May-November 2017. This is the highest estimate over the six-year research by EBA experts. For comparison, the EBA tax index at 2.43 points related to the SFS was in a negative zone last year.

Read alsoEBA: Investment Attractiveness Index in Ukraine goes down in H2"It's the highest tax index over the period of its compiling. Dynamics show the index improves due to a reduction in the fiscal pressure and improvement, although unstable, of tax services. First of all, a decrease in the tax pressure has had a considerable impact on the result," EBA Tax Committee Chair Volodymyr Kotenko said.

According to the survey, the imperfect tax legislation in Ukraine is a major challenge in the fiscal sphere today.

Some 70% of tax experts evaluate the quality of tax legislation in Ukraine as mainly low-quality, which needs complex revision and amendments.

"The ability of the tax authority during inspections to recognize any transaction as fictitious if the legislation does not establish an exhaustive list of documents confirming the fact of the transaction. It leads to constant manipulations and fictitious tax notification decisions," reads the EBA report.

According to Prodan, the SFS vision of the tasks set by the service for 2018 coincides with that of the EBA members.

"We are finishing this year with the over-fulfilled plan and record high budget revenue that have been achieved through de-shadowing and combating smuggling and fictitious VAT refund schemes. Our priority task for the next year is to improve risk management and the quality of tax services aimed at increasing voluntary tax payments. We pay special attention to the development of IT infrastructure. Our absolute goal is to virtually provide administrative, consulting and control services, as well as tax payments via the electronic tax reporting system. I also want to note the creation of a single treasury account for effective tax administration, the development of electronic document flow and the payment of decent salaries and the creation of decent working conditions for SFS personnel to eradicate corruption. Our task No. 1 is to provide customs services with scanners, electronic locks and other means. It is very important that business representatives, the main taxpayers, share our vision. We have a constructive dialogue with them," Prodan said.

The European Business Association has been publishing its surveys on tax index since 2011. It is compiled based on the EBA experts' opinion as for the quality of tax legislation, complication/easiness of the tax administration, fiscal pressure and the quality of tax services.