Leading entrepreneurs criticize small business legislation

Viacheslav Klimov, the president of the Union of
Ukrainian Entrepreneurs, has become the latest business leader to criticize the
legislative initiatives by the president and his parliamentary faction to
regulate small and medium-sized business. Achieving 40% GDP growth in five
years, the goal set by the Cabinet, requires “thinking about the drivers of
such growth,” Klimov told a meeting of entrepreneurs on Oct. 4, as reported by
the epravda.com.ua news site. Instead, the new legislation requires that about
1 million entrepreneurs use Digital Payment Registrars (RROs), in addition to
paper reports (so-called “Z-zvity”) that require direct reporting to the State
Tax Service, which “undermines the essence of simplifying the system,” said
Klimov, the co-owner of Nova Poshta, Ukraine’s largest private parcel
deliverer. “That is, we’re talking about a million entrepreneurs whose lives we
are complicating,” he said.

With his comments, Klimov joined the mounting
criticism that included Vladyslav Chechotkin, the owner of among Ukraine’s top
Internet retailers rozetka.com.ua. Among his main concerns regarded the
legislation’s attempts to prevent entrepreneurs from registering all their
sales (subject to taxation), such as enabling buyers to file complaints with
the State Tax Service in such instances over UAH 850. In which case, tax
authorities could impose a fine of 150% of the value of the purchase that was
not registered, to be shared by both the buyer and the state. “There are no
limits to the number of complaints, no accountability for the complainant, and
no accountability for the tax service. They alone decide if the receipt is
correct or not,” Chechotkin said, as reported by the epravda.com.ua news site.
“At that, there is a potential fine of 250% for business and always, with each
complaint, 100% problems with unplanned reviews for the entrepreneur.”

Ukraine’s parliament approved on Sept. 20 legislation
that requires state-sponsored cash registers for all small and medium-sized
entrepreneurs, as well as Digital Payment Registrars, with the stated goal of
bringing more economic transactions out from the shadow economy and officially
registered. It introduces a cashback feature as of Oct. 1, 2020 that enables
consumers to review their receipt and determine whether their purchase was
official, the epravda.com.ua news site said. If tax officials didn’t receive an
electronic receipt, the consumer is encouraged to file a complaint, with the
promise of a cashback reward if a review determines an evasion attempt.