state policy

The coalition has prepared amendments to the already adopted tax reform

The coalition has prepared amendments to the already adopted tax reform
Photo: Ivan Chernichkin

MPs raised the issue of revision of the tax rules, which they have adopted only a month ago. In particular, members of the parliamentary coalition have some questions to the new order of charging and payment of the unified social tax (UST). The other day a group of parliamentarians members of the coalition has registered a bill, which repeals and revises a number of requirements for the companies expecting to pay the UST at a reduced rate.

Only a few days

Amendments to the Tax Code entered into force on January 1 and according to them the maximum UST rate of 41% shall be charged with the application of the 0.4 coefficient. The preferential rate calculated based on this formula should reach 16.4%. It was expected that such novelty should interest the businesses in bringing people’s salaries out of the shadows while reducing the tax burden on the wage fund. Yet some clarifications and improvements were made in the law on the day of voting.

As a result, only those companies able to fulfill a number of conditions will be able to use the reduction factor. Among other things, businesses will have to increase salaries of their employees by 30% compared to the previous year and set average salaries at the amount of at least three minimum wages. Today the sum is more than UAH 3,600.

The reform was criticized by business lobbyists and specialized associations, which were not considered for approval of the innovations. Head of the Economic Policy Commission of the Ukrainian Union of Industrialists and Entrepreneurs Yulia Drohovoz says only a few will be able to take advantage of the preferential factor in view of the adopted changes. This is particularly true of enterprises in the regions where average salaries are lower than three minimum wages prescribed by the law.

The companies, which paid salaries openly not hiding their actual size from tax inspectors, cannot count on preferential rates either. The bill proposed by the coalition eliminates the provision on the UAH 3,600 rate of the average salary. At the same time officials proposed to lower the threshold of salary increases in companies to 20% from the current 30%. As it was stated in the explanatory note to the document, the revised criteria will make it possible to legalize incomes of at least two million people.

This will increase revenues to the pension fund by UAH 11 bn and by UAH 8 bn to the local budgets, according to the calculations of people’s deputies. Over the past year, the proceeds from payment of the UST totaled UAH 179.6 bn, reported the State Fiscal Service (SFS). Admittedly, considering such amounts, in this case the goal is not the income for the budget. The goal is to bring at least part of people’s wages out of the shadows.

Go and change

The chances of adoption of the document in February are rather high, said one of the draftsmen, First Deputy Chairman of the Rada’s Committee on Taxation and Customs Policy Andriy Zhurzhiy in a conversation with Capital. The MP says there is an agreement between the factions. In addition, the group of draftsmen consists of representatives of all political forces members of the parliamentary coalition except the Batkivshchyna. Moreover, representatives of the SFS joined MPs in their work on the document. «The document was agreed with the SFS,» said Zhurzhiy. He says he addressed the Cabinet regarding the possibility of filing the bill as a government document, but in order not to delay the process officials agreed to submit the draft on behalf of the Mps.

«We initiated changes currently included in the law, in particular, the 0.4 coefficient. In this case we refined the bill with representatives of the SFS,» explained Zhurzhiy. He added that since the document was introduced to the parliament not so long ago, the specified committee had no chance to examine it yet. However, it is most likely that in February the bill will be voted in the session hall.

The bill proposed by the parliamentarians is in no way a solution for reduction of the load on the wage fund, believes Head of the Secretariat of the Entrepreneurs’ Council under the Cabinet of Ministers Andriy Zablovskiy. In his opinion, those are rather isolated decisions, while business expects the government and the Rada to have a more integrated approach. «The new bill should correct the mistakes made in a hurry in the process of introduction of changes to the Tax Code on the eve of winter holidays,» says Zablovskiy. «The proposed bill is better than the already existing one, because only a few companies can comply with the applicable criteria for reduction of the UST. Yet the document does not solve all the problems,» he adds.

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