84 business associations and members of the Ukrainian Business Council turned to Prime Minister of Ukraine Denis Shmygal with an open letter.
to Prime Minister of Ukraine
Dear Denis Anatolyevich!
The Ukrainian Business Council, which includes 84 business associations, takes this opportunity to congratulate you for appointment as Prime Minister of Ukraine, to testify your deep respect and addresses you with the following.
Legal and law-abiding business, the interests of which is represented by “URB” coalition, are consistently upholding the equality of market participants, simplifying the business environment, reducing the shadow sector of the economy.. In response to your call “to receive answers from industrialists, entrepreneurs, small and medium-sized businesses, they need so that business feels like home, can calmly do its job, ” – We are ready to provide our analytics and best practices on this issue.
Experts from business associations and Analytical centers have already developed a number of proposals based on a thorough analysis of international experience and analysis of alternatives that indicate ways to minimize and level these and other threats, and the implementation of which will ensure sustainable economic development of the country. These proposals are fiscally responsible, will not lead to a reduction in state budget revenues aimed at improving the conditions for doing business, detailing, deregulating, combating smuggling and violation of customs rules.
We note that Ukraine today faces significant internal and external challenges that threaten national economic interests and which are exacerbated by global crises. In particular, the challenges are macroeconomic, financial, socio-demographic, institutional, energy, foreign economic and the like.
Currently, we see the following main threats:
Macroeconomic – in particular, the global economic crisis that is starting; monopolization of key sectors of the national economy; a significant level of economic shadowing; a significant amount of smuggling and tax-free imports, which leads to distortion of competition and harms domestic producers and so on.
Finance – in particular, flight of capital abroad and the massive use of offshore jurisdictions, tax havens to evade taxation within country; a critically high level of redistribution of GDP through the consolidated budget of Ukraine and social funds; dependence of the banking sector on the policies of state banks and so on.
Institutional – in particular, informal institutions, relations and structures that contradict the formal ones and distort them, impossible rules of law; merging of individual sectors of the economy with state power; insufficient protection of property rights due to imperfections in justice system and so on.
Energy – in particular, an imperfect Energy Strategy, which does not meet the requirements and criteria of the industry strategy as a whole, since it is not a comprehensive and complete document; critical dependence on energy imports, which impedes the development of national energy producers; risks associated with the monopolization of the energy sector and things like this.
Foreign economic – in particular, the lack of a clear system of interaction between state bodies on issues of ensuring foreign trade security; underdevelopment of foreign trade infrastructure; drawing Ukraine into trade wars and growth of protectionism in the world; sanctions influence on the economy of Ukraine by the aggressor state and like.
To minimize and mitigate these and other threats, it is important to make changes to a number of legal acts that will provide the necessary precautions – in particular:
- Adoption of a new Customs and Tax Code of Development, which provides for norms to deoffshorize economy, replace income tax with tax on withdrawn capital, reduce the burden on wage fund, with compensation for this by modifying the land tax, reducing the number of various benefits, eliminating smuggling schemes through transparent electronic control, improving control of the supply chain of risk categories of goods, reviewing the rules of total fiscalization for microenterprise entities will efficient saving of fiscalization for risk groups of goods, balancing the tax burden per hectare for legally and illegally working agricultural producers, simplifying the procedure for administering taxes and fees while introducing an optimal tax amnesty model (one-time zero declaration of citizens’ income) and establishing a moratorium on amendments to Tax Code of Ukraine for three years, to increase tax rates and fees.
- Continuation and completion of the institutional reform of the tax and customs services, liquidation of the tax police and other economic units of various services and the creation of a new single analytical body that will investigate economic crimes.
- A public inventory and audit of taxes and budget expenditures in order to reduce the national budget expenditures to a target of 33-35% of GDP. Demonopolization of heat and energy supply markets, rail transportation, ensuring equal access for participants in related markets to goods and services of natural monopolies, implementation of energy efficiency and saving measures;
- Introduction of a new industrial policy and protection programs for domestic producers in accordance with world trends (in particular, the new EU program), improvement of protective instruments in public procurement, improvement of anti-dumping procedures, full launch ESA and so.
- Ensuring development of economic sectors, the organization of self-regulation of industries, as well as the formation of mechanisms for creating jobs and access of small and medium-sized businesses to financial resources.
- Increasing transparency, simplifying procedures and automating them; creating institutional checks and balances; deregulation and narrowing of government intervention to the minimum necessary limits; privatization of state enterprises.
Responsible business seeks to build a legal business environment in Ukraine, with uniform rules that should be understood by all participants in economic relations. We have already carried out a number of studies in these areas and have developed draft legal acts that we are ready to provide for review and further discussion.
We appeal to Prime Minister to take part, together with representatives of Ukrainian business and experts from analytical centers, in an inclusive public discussion of the key threats to the Ukrainian economy and ways to minimize them, as well as ways to create the most favorable business environment.
Members of Ukrainian Business Council