Parliament approves legislation to ease conditions for SMEs

Ukraine’s parliament approved legislation on May 13 to
ease conditions for small and medium enterprises amid the ongoing coronavirus
quarantine. Bill No. 2166, which drew 321 votes (compared to 226 needed) in its
second reading, removes the requirement that individual entrepreneurs (known
locally as “FOPs”) pay the minimum Single Social Contribution (social security
tax) in those months no profit was earned. Also freed from the tax were FOPs
engaged in independent professional activity who (1) collect pensions, (2) are
disabled, or (3) conduct business activity simultaneously with their registered
individual enterprise.

Parliament also approved Bill No. 3329-d at the same
session, with 333 votes, that extends tax breaks and introduces new ones during
the quarantine period, particularly excluding from taxation the salaries of
medical workers combatting the COVID-19 as of June 30. The legislation also
reduces the minimum authorized capital at banks to UAH 200 mln (from UAH 500
mln) and extends simplified procedures for capitalizing banks until Aug. 1,
2024. Exemptions from fines and penalties for unpaid consumer loans are
extended until June 30.

Ukraine’s cabinet is planning to create employment
opportunities in several key economic sectors, including road construction and
transport infrastructure (154,000 jobs), landscaping (150,000 jobs), and
agriculture (85,000 jobs), said on May 13 Ihor Petrashko, the minister of
economic development, trade and agriculture. About 487,000 Ukrainians are
registered as unemployed at the moment, 197,000 of which (or about 40%) emerged
after the severe quarantine was imposed on Mar. 12, he said. The ministry
expects the unemployment rate to rise to 9.4% by the year end, compared to 8.2%
in 2019. About half of those registered as unemployed have university degrees.

The Kyiv mayorship has prepared a resolution for the
city council’s approval to reduce to a symbolic one hryvnia the fiscal fee for
summer outdoor restaurant terraces until the end of October, and until the end
of December for those seasonal, Mayor Vitali Klitschko said during an online
press conference on May 13. Those businesses who had the summer and seasonal
terraces last year will have their documents renewed in two days, he said, also
vowing similar processing for new terraces. Those reopening SMEs renting
municipal property will get a 50% discount, he said, while those unable to
reopen won’t have any payment.

Zenon Zawada: These are all positive measures, though they won’t have much of an
impact on mitigating about 5% GDP plunge being projected by the National Bank
for this year. The job creation being planned by the government involves
low-wage, hard labor. Meanwhile, tax breaks and fee cuts also reduce desperately
needed fiscal revenue. But given that local elections are approaching in
October, such measures are inevitably going to be pursued regardless of their
calculated economic effect.