Zelensky signs tax amendments after five-month delay

Ukrainian President Zelensky signed a law on May 21
(Bill #1210) amending the tax code to improve tax administration by removing
technical and logical inconsistencies, making simplifications and introducing
international standards of tax oversight, the president’s press service
reported that day. The law also implements the OECD’s Action Plan on Base
Erosion and Profit Shifting (BEPS). The law provides the necessary conditions
for reforming the State Tax Service, as well as enhanced online services for taxpayers,
enabling them to submit filings and received documents online. “It’s expected
that fulfilling the law’s conditions enhances investment stimuli by means of
introducing the accelerated depreciation of fixed assets,” the press service
said.

Zelensky delayed signing for five months the èill #1210
owing to dissatisfaction expressed by certain big business representatives,
Parliamentary Taxation Committee Chair Danylo Hetmantsev said in an interview
published on May 25 on the epravda.com.ua news site. Nonetheless, Zelensky
signed the legislation since these parties “weren’t radically opposed,” he
said. Certain Ukrainian business associations supported the bill, while others
were opposed, he said. The American Chamber of Commerce and European Business Association
both supported and criticized certain provisions. “This isn’t ice cream that
everyone likes. Any tax innovations are always approached by business with
bayonets. And that’s normal,” he said.

Zelensky didn’t want to sign the tax code amendments but
approved them because they are an IMF requirement for the coming loan program,
said on May 26 Mikheil Saakashvili, the head of the National Council of Reforms
of the President’s Office. In his view, the amendments signed by Zelensky “need
to be urgently changed” as they significantly increase the authority of tax
officials and make tax administration more complicated. “The tax service gained
the right to tighten the screws and the presumption of guilt was shifted onto
taxpayers because they will have to prove something,” he told the Ukrayina 24
television network.

Zenon Zawada: The big
advantage we see from the tax code amendments is the ability to pay taxes
online, which inevitably reduces interaction with potentially corrupt state
officials. But if the benefit of the overall legislation is still being
debated, with Saakashvili even claiming the amendments will make much
administration even worse, then we view this as a lost opportunity to radically
change Ukraine’s image among international investors.