Ukraine cabinet moves to liquidate State Fiscal Service

The Cabinet of Ministers of Ukraine approved on Dec.
18 a resolution with reworking to reorganize the State Fiscal Service back into
the State Tax Service and State Customs Service. Contests to determine their
heads will be conducted in the three months after the resolution is finally
approved, said the Finance Ministry, which will create a commission to oversee
the reorganization. These bodies will be organized under the ministry.

The resolution takes into account IMF recommendations
and the government’s mid-term plan for priority actions until 2020, the
statement said. “The division of the State Fiscal Service into two services is
an important step on the path to building a quality system of administering
taxes and fees,” said Serhiy Verlanov, the deputy finance minister. “Reforming
the State Fiscal Service creates the foundation to demilitarizing tax bodies
and improving the quality of services that are offered to taxpayers and
improves the transparency and accountability of the work of tax and customs
bodies.”

The proposed reorganization of the State Fiscal
Service will require an audit of its database, said on Dec. 19 Nina Yuzhanina,
the head of the parliamentary committee on tax and customs policy, as reported
by the Ukrinform news agency. It’s not understood the extent to which the
databases are protected, ensure the level of work that needs to be done and can
technically fulfill all the work that the new bodies will need to perform, she
said. The tax and customs codes also have to be amended in this parliamentary
session in order for the division to occur, Yuzhanina said.

Originally called the Revenue and Fees Ministry, the
State Fiscal Service was created in 2012 in what was largely seen at the time
as former President Yanukovych consolidating authoritarian power over Ukrainian
state bodies. It united the State Tax Service and State Customs Service into
one government body.

Zenon Zawada: The Finance
Ministry’s statement on this reorganization doesn’t make clear the timeframe in
which this will occur. So it’s not clear if this will affect the reinstatement
of Roman Nasirov as State Fiscal Service head in the coming weeks. The court
ruling reinstating him will be reviewed by an appellate court.

Nasirov returning to lead the State Fiscal Service
would benefit Ukrainian President Petro Poroshenko in his re-election campaign,
giving him the ability to use tax authorities to influence elections locally.
But if the State Fiscal Service is liquidated, then so are Nasirov’s career
prospects considering the corruption scandals surrounding him.

Yuzhanina’s statements reveal her intentions to delay
the State Fiscal Service’s reorganization. Considering she is loyal to
President Poroshenko, this could indicate that the president wants to undermine
this move to liquidate the State Fiscal Service in order to preserve his
authority over it, as well as Nasirov’s possible return to lead it.