From a legal point of view, every year the government violates the Tax code, which stipulates the principle of stability. Any tax changes should be made six months before the start of the new fiscal year, i.e. until 1 June. The present government has continued the negative practice of previous governments. About the essence of tax innovations of the government and “improving” the Tax code, the correspondent of ГолосUA said economist Viktor Skarshevsky.
-Victor, we are not the first year indicate that you need to improve the tax system… is There a need to rewrite the Tax code?
Purely legislatively and legally if to rewrite the tax code and to introduce any changes, this must be done before June 1 – that is, six months before the start of the new fiscal year. This is called the principle of stability of tax legislation, and this principle is enshrined in the Tax code. Ukrainian authorities annually violate this principle. And this year, they served different budget tax changes in the Parliament, and it already is fall, and accept these innovations are sometimes a few hours before the new fiscal year. This is a pure violation of tax legislation, that is, changes in the tax laws are violations of tax legislation. And so from year to year, unfortunately, continues.
-What tax initiatives are our MPs?
Something that applies to today’s situation and today’s initiatives are introduced, they are all aimed at strengthening legislation, on the one hand, and on the other hand, they are aimed at the emergence of new schemes that will allow to evade taxes. These innovations usually lead to the deterioration of the lives of ordinary citizens, as this time you increase taxes and postal services.
Regarding the tax evasion scheme known to the old “good” scheme of zero excise duty used in perfumery.
As you know, everything new is well forgotten old. For example, in fact we have abolished the excise duty on alcohol for perfumes. On paper,” dramatically increase the production of perfume products in the country. The alcohol used in perfumery manufacture, the tax is cancelled. And if you look at the amount of alcohol, which “on paper” goes to the perfumers, and in fact goes to beverage factories, these perfumes Ukraine would have filled up the whole world.
As practice shows, a zero excise duty on alcohol is the easiest way to be attributed to spirits.
-It turns out, alcohol for perfume smells bad…
– Of course. Now, with the adoption of these amendments to the Tax code (as of 23 November, the Verkhovna Rada during the consideration of the state budget-2019 adopted in the second reading amendments to the Tax code; adopted a zero rate of excise tax on ethyl alcohol used for the production of edible vinegar, perfumery and cosmetic products and technical products. – Ed.) in Ukraine again there will be many perfumers, and Ukraine will again become a powerful manufacturer of perfumes. I repeat that all this is only on paper, because the alcohol that will be used for the production of perfumes, spirits, will be subject to a zero excise duty i.e. excise duty on the alcohol will not. This situation in Ukraine has been. All this alcohol is actually left for the production of vodka. What is not a scheme? That these tax changes have provided for a zero excise duty on alcohol for technical purposes and for perfumery.
-Industrial alcohol can be used for the production of vodka?
-Yes, the alcohol, without going into the nuances, can be used as food alcohol. In any case, when there is such a loophole – zero excise duty, is used as the option of tax evasion. All this is done in the interests of shimshikov – in this context, it turns out the producers of vodka. Now they will be able to buy this cheaper alcohol. One liter of pure alcohol, it seems, is 127 UAH, but this is not so important…
-The excise tax on vodka we, by contrast, rises…
-There Yes, but that’s another topic. On the other hand, stricter conditions for ordinary citizens – for example, for those who buy goods in foreign online stores. This law introduced first from January 1, the maximum amount of a parcel up to 150€, and then the VAT, but since July 1 for postage over 100 Euro for a single recipient-individuals. There are three points. One point that this increases the cost of goods for ordinary citizens. The second point is that gray schemes of import will remain, because a large consignment imported by other grey schemes. The third point is that the tax agents assigned to postal operators. This means that people will pay (you received and paid VAT), and will pay postal operators. By the way, there’s a fourth caveat – this will be the first “New mail”, it will administer the payments. The cost of administration of this tax can be quite high, because small packets and a large amount of items. It may even lead to increase of tariffs for shipment, i.e. not only the cost of the goods themselves more expensive for Ukrainian citizens, but also stoimosti shipment will increase.
– Why did you have to split hairs with these packages?
– The fact that postal operators will be tax agents, is contrary to common sense, and the same tax legislation. About mail forwarders, they managed also distort competition, because “Ukrposhta” is not a tax agent. It is the exception that is tricky says that those postal operators that operate 100% under the rules of the universal postal Union, and this organization more than 140 years, they are not tax agents, and to pay all payments are already the recipients of parcels, that is, in principle, citizens of Ukraine. That is, the “Ukrposhta” will not have additional expenses, she’ll get a competitive advantage over private postal operators. In any case, “Ukrposhta” from tax innovations will not be affected.
Other postal operators have additional costs.
-So they want to fill the budget?
-No, this is different. As you know, “Ukrposhta” wants to monopolize the market, there is another bill which is now being discussed. So-called “tax agent” fits well into the logic of “Ukrposhta”, in terms of monopolization.
The withholding agent is disadvantageous because an additional cost. And most importantly – it is contrary to the Tax code as a tax agent may be the only one who as, for example, in the Bank, paid some salary or bonus, the percent people who are tax agents. And in the case of postal operators, they have provided services for the shipment, but it is quite another matter, and is contrary to the Tax code.
Is primarily an effort by ordinary Ukrainians…
-Of course. In any case, this rise in shipments for the Ukrainians, and at the same time reducing costs from their competitors, “Ukrposhta”.
Summarizing, we can say that all these tax changes, as written in the document, bring the effect of additional income in the amount of 6.3 billion. And it’s only half a percent of all revenues. Only half a percent! Without solving the question of filling the budget, under the guise of just “half a percent” of revenue in the budget creates a negative impact on Ukrainian citizens, distorted competition, and even create new schemes for tax evasion. While not done those things which should be done. Where the legalization of gambling?! Where the legalization of amber mining?! There are also environmental component is.
-Gambling should bring considerable income to the budget…
– Concerning the gambling industry, if you look at it from conducting the state lotteries in 2013, the budget received USD 40 million, and in 2017 from the state lottery received only $ 1.5 million is 30 times less than in 2013. And so was minuscule, and now nothing at all. All these things could give a small, but still push for ease of doing business, it is necessary to impose the same tax on the capital, which simplifies the administration of taxes, when levied not profit, but only what you take out of the business. Such changes in this package is not included, and filed a separate law. With this law they want to introduce in a phased manner, completely changing its essence and meaning, first for the small business, then go for the big one. If the law is not for everyone, it completely lost its meaning – it will be very harmful. Gradually, you cannot enter the law. This is again a distortion of competition and loss of budget money. Income tax is one of the most corrupt taxes, it ranks second after VAT. The tax on the capital also prevents, at least greatly complicates the illegal withdrawal of money to offshore. That it had to be done first.