There is no improvement with the social security tax in the country, - Klymenko

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Former minister of revenue and duties Oleksandr Klymenko sees no improvement of the situation around collection and administration of the social security tax.

«While the top officials of the tax authorities are competing with each other verbally trying to find out which one of them uncovered more „envelope“-paid wages or tax pits, the social security tax, which is also administered by the Ministry of Revenue and Duties, got left behind. It is the Ministry of Revenue and Duties and State Fiscal Service as expected, since nobody has seen any official orders about it,» wrote the former minister on his Facebook page.

Klymenko also notes that there is also no definite solution for the situation with the social security tax: it is proposed to cancel it, reduce it and nobody knows where to find the ‘compensators’ for that.

«This is serious, because social security tax is used to pay pensions, social benefits, and unemployment benefits. In the light of the critical situation in the east of the country and the growing number of migrants the government will need this money and very soon,» says the former minister, noting that work on social security tax must be one of the priorities of the Ministry of Revenue and Duties.

The former minister reminds that the press services of the Ministry of Revenue and Duties reported that in January — May 2014, UAH 74.4 bn of social security tax payments was collected, which corresponds to 102% of the guidelines of the Ministry of Finance. In May UAH 14.6 bn was collected, which is UAH 300 mn more than in May 2013, according to the ministry. However, Klymenko notes that looking at the statistics at a different angle the picture is not so optimistic: UAH 14.6 bn collected in May is actually UAH 1.4 bn less than in April (UAH 16 bn). In terms of year-on-year statistics, UAH 74.4 bn proceeds from the social security tax collected as of June 2014 is UAH 116 mn lower than the same indicators for the last year (UAH 74.5 bn).

«Reduction of the social security tax Belous has been considering for four month is quite realistic. We studied this issue for a long time when I worked at the ministry and came to conclusion that the reform of unified tax declaration would be the only possible compensator that would reduce the loan on the payroll fund. In fact the reform is ready for implementation. [...] However, instead of it a strange version of tax amnesty was proposed, which does not help improve transparency of the tax system,» writes Klymenko.

He also sees no improvements in administration of the social security tax. As of the end of the last year, the Ministry of Revenue and Duties was ready to introduce a united reporting for the social security tax and personal income tax, he says. Moreover, there was a plan to introduce the electronic taxpayer’s cabinet. «Business waited for this step; we worked on the type of reporting and considered the options for reducing the periodicity of payments. In fact, this factor is now pulling Ukrainian down the Tax Rating by Doing Business,» writes Klymenko.

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