Zelensky extends economic relief measures, asks cabinet for more
The Ukrainian government hasn’t taken enough measures to help the country recover economically from the coronavirus pandemic, President Zelensky told a May 28 meeting of officials to combat the virus. Prime Minister Shmyhal assured him at the meeting that refinancing and employment programs are being planned, the epravda.com.ua news site reported. The prior day, Zelensky signed a bill (#3329-d) extending until June 30 quarantine-related economic relief measures, including tax breaks on the salaries of medical workers and maintenance workers combatting the COVID-19 disease, the president’s website said.
The law also provides tax-free financial aid to employees and entrepreneurs who lost income owing to quarantine restrictions. Self-employed individuals are also freed from the social security tax for May. The law grants local governments the ability to reduce tax rates on farmland and real estate. The law also extends a moratorium on tax inspections, interest payments on consumer credit, late fees on tax payments, and penalties on tax violations.
Zelensky made his request a day after the cabinet reportedly presented a state program to overcome the negative effects of the coronavirus, as reported by the press service of the economic development ministry, which didn’t offer any specifics. Its full version will be published in three days, the statement said. The program – “practically a road map” based on the proposals of ministers, local officials, entrepreneurs and experts – consists of about 230 measures, many of which have been introduced, the statement said.
Ukraine’s medium and large enterprises drew a UAH 4.9 bln pre-tax net loss in 1Q20, compared to UAH 111.1 bln in net income in the same year-ago period, the State Statistics Service reported on May 25. Losses swelled by five times to UAH 204.8 bln, while income reached UAH 199.9 bln, more than doubling from a year ago. The portion of enterprises with a net loss reached 40.8%, compared to 27.2% in the year-ago period.
The 2019 state budget lost UAH 33.5 bln in revenue owing to tax breaks for business, compared to UAH 19.9 bln in 2017, according to a study published on May 25 by the Kyiv School of Economics based on state tax statistics. Local budgets lost UAH 9.2 bln in revenue owing to tax breaks, compared to UAH 6.2 bln in 2017, the study said. “Freeing from taxation certain payers, the state either has to reduce the volume of spending in the very same amount or collect the lacking costs from other taxpayers,” the study said.
Zenon Zawada: It’s challenging to determine a tax policy for a state like Ukraine, where corruption is a problem and tax evasion is rampant. That task gets even more complicated in conditions of a contagious and deadly virus that has damaged the economy. In light of these factors, the state’s trouble with budget collections will only intensify amid rising expenditures (including swelling payments on loans to cover the higher spending).