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PM presents tax reform and offers to get "fishing rod instead of fish"
06.08.2014 | 16:09
Department of Information and Communication of the Secretariat of the CMU

The Government of Ukraine has proposed a plan of comprehensive changes in the tax system. The tax reform has been presented by Ukrainian PM Arseniy Yatsenyuk at a Cabinet meeting on Wednesday, August 6. The PM has invited to reduce the number of taxes and fees from 22 to 9, substantially revising the taxation of profit, payroll, and agricultural enterprises and simplifying tax administration.

The PM has informed that the Cabinet has developed a plan for economic growth: "We believe that the Parliament should adopt a law on economic growth in September, which includes the tax, single social tax reforms as well as the abolition of the tax police. This is the first package that Ukraine needs for its development."

Arseniy Yatsenyuk has noted that the current economic model in Ukraine is based on the premise that everyone is given a fish: "However, this fish smalls bad, has been frozen for several times and look like a Soviet-style hake. We invite everyone to get a fishing rod with a good coil and a large fishhook, which will enable to catch a big and high-quality fish."

The Prime Minister said that the key problem of the Ukrainian tax system is the number of taxes, the system of their administration as well as tax rates. To solve these issues, the Government of Ukraine offers a comprehensive plan for changes in the tax system.

Today, there are 22 taxes paid by entrepreneurs. The Government proposes to leave only 9 taxes.

According to Arseniy Yatsenyuk, it would be canceled a "series of rudiments, primarily the fee for performing certain types of business activity":"Many business entities have such a paper, on which it is written "patent." 123 000 taxpayers absolutely inefficiently use their time, and we believe that this tax should be abolished."Moreover, the PM has informed that it is proposed to cancel fees for certain types of business activities, those for natural gas, oil and gas transportation, tourism tax, taxes on viticulture, horticulture and hop growing.

Some of the taxes, according to the concept of the Cabinet of Ministers, shall be transformed and summarized: We shall qualitatively alter the excise tax. The excise tax should include a classic excise tax and additional fees, which by their nature are bound to the excise tax. Thus, the excise tax is a tax on luxury. Under the new excise tax, we introduce the classic luxury tax, we transfer there the first registration of a vehicle, environmental tax and fuel charge for an extra charge for electricity tariff."

The Government also proposes to eliminate the fee for the use of forest resources and embody it in the classical environmental tax.

As for the rent, Arseniy Yatsenyuk has reminded that the Government increased royalties on the most profitable sectors of the Ukrainian economy - oil and gas, iron ore and other minerals, "We transform the rental fee and propose a fee for special use of water, payment for the use of royalty and fee for the use of Ukraines radio frequency resource to transfer into a single rental payment, as well as to establish a new system and tax base."

As for the property tax and the land tax, the Government proposes to take the classical European model and introduce a single tax - a tax on real estate, which will provide both for taxation of land and property, which is located on land. The Government proposes to transfer the fixed agricultural tax into the single tax.

At the same time, added Arseniy Yatsenyuk, under the bill on fiscal decentralization the property tax and the single tax (former agricultural tax) go exclusively to the budgets of local communities.

As for the income tax, said the Prime Minister, today it is paid on the ultimate principle real income and payments to the budget are untrue." The Government proposes to unify the accounting and tax accounting: "What weve been talking about for decades and what has never ever happened - to abolish the tax registration for the income tax and transfer payments registration and accrual of the income tax solely on the basis of accounting data".

The Cabinet of Ministers has also proposed to discuss a model of VAT reforming in the agricultural sector."

"We know that the Parliament has a serious agricultural lobby, and for this purpose we are ready to discuss the tax reform in the agro sector with the Parliament of Ukraine", he added.

The Prime Minister has noted that the change in a tax regime of agriculture sector will change the state support of this industry: "I believe that in 2015 the main element of support for agricultural enterprises should be the compensation of the interest rate on loans received. This is the most transparent and effective mechanism."

By the end of this year we should have up to UAH 0.5 billion for the compensation of interest rates. In 2015 we will provide a more significant amount of money in order to compensate for farmers interest expenses related to attraction of credits, Arseniy Yatsenyuk emphasized.


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