The new economic
policy of the Government envisages expense reduction, simplification and
shortening of taxes, control over transfer pricing, active export promotion and
protection of the Ukrainian markets. This was announced by Prime Minister of
Ukraine Arseniy Yatsenyuk in the course of presenting of the Cabinet of
Ministers’ Action Program at the Cabinet meeting on Tuesday, 9 December.
stressed that the military economy finds difficulties to ensure stability,
"But it is our objective. After Russian military aggression stopped the
economy must embark on a new track".
First of all,
according to the PM, it is necessary “to undertake the way of drastic reduction
in expenditures of the public sector", "We are talking about
reduction share at 10% concerning expenditures of the public sector. This is
the task we have set for the following two years."
Direct approaches to
cut expenses and the budget will be determined by the Government in synergy
with the partners from the International Monetary Fund, the World Bank and
other international financial institutions, Arseniy Yatsenyuk explained and
noted that the first round of negotiations with the IMF was taking place this
In the framework of
reduction and expense optimization it is required adoption of a new State
Budget and amendments to the Budget code.
Government also submits to the Verkhovna Rada the amendments to the Tax Code,
which contains reduction of the number of taxes from 22 to 9, "Certain taxes
are merged, another part of them are abolished, a part
rather methodically. In a first stage we will reduce the number of taxes and
change the taxation base. In addition, we are to combine accounting and
financial reports in compliance with the international standards", Arseniy
Apart from that, he
informed the Government offered to make “certain radical, risky but correct
steps” to legalize salaries. “Our goal is to reduce single social tax from 41%
to 15% on the gradual manner. It will enable to bring salaries out of the
shadows and legalize them”.
convinced that such a radical solution in the next two years will yield into a
significant increase in both revenues of the budget and real increase in
incomes of the citizens. And, accordingly, their social benefits and pensions".
also singled out an issue of taxation of large incomes, "We adhere to an
equity principle: who earns a lot, he must pay taxes". He reminded that there had already been adopted a number
of tax changes on the taxation of the
oligarchs, "We should move further to preserve an equity principle in
"In order to
legalize wages we provide, on the one hand, low tax rate, on the other - the
Government will introduce additional liability for payment of shadow salary and
shadow cash turnover. The sooner we reduce the cash turnover, the faster it
will give us an opportunity to legalize salaries, and to really curb corruption
in the country", - stressed the Head of Government.
Regarding small and
medium businesses, the Government, in its programme of actions, offers “two
simple solutions”, “First is to halve the single tax for small and medium
businesses. Second – not to check them for two years".
In the framework of
the implementation of the new economic policy of the Government, according to
Arseniy Yatsenyuk, will suggest to the Parliament to adopt the law on tax
compromise, "This is an introduction of zero tax return. Everyone must say
what they have, to declare it and reveal. It is our start. In the aftermath the
Government considers it necessary to introduce a general income declaration
system. And this will provide an opportunity to fight corruption and claim an
equity principle in the distribution and taxation of incomes. And it
corresponds to European and international standards".
The PM also said that
the Cabinet of Ministers intended to make changes to the transfer pricing law
to introduce “a transparent and efficient system of taxation of large
business", "The first steps were made five months ago, when for the
first time in 20 years there were imposed high taxes on profitable business –
rents on mineral resources, oil, gas".
framework of the law on transfer pricing we will implement a scheme where tax
evasion by large companies through offshore or any other schemes will be
closed. We support large business, but we demand from big business to honestly
and transparently pay taxes", Arseniy Yatsenyuk explained.
Aimed at de-monopolization
of the economy, the Government envisages in its program the need to adopt a new
law on economic competition, “Monopoly implies regression, competition - progress
and development. Therefore, the formation of a new Antimonopoly Committee of Ukraine
and approval of a new law on economic competition".
"Everyone who is
a monopolist must be subjected to an antimonopoly inspection and either to be
deprived of the monopolist status, or to act abiding by the state regulations like
companies, which are controlled by the state, as they are monopolists on the
market," he said.
The objectives of the
Government include promotion of Ukrainian exports and protection of Ukrainian
market. Arseniy Yatsenyuk informed that Ukraine had already increased its
export volumes to the European Union by 12% and used almost all the quotas on supply
of agricultural products in the European Union, "But this is just the
first step. Now we need to think about the quota increase and conquering
markets both of the European Union and other countries".
According to Arseniy
Yatsenyuk, the Government has set a task to start negotiations on establishing
a free trade area in particular with the following countries: Canada, Turkey,
Israel, the Arab Gulf countries, Western Africa, "The Office of Trade
Representative, which was established by the Government, will carry out an
assertive policy to protect a Ukrainian manufacturer and to develop the new
markets. By all tools and methods we possess, including through the World Trade
Organization of which we are a member".