For almost two months now, Ukrainian businesses have been affected by the forced restrictions and reduced workloads, which have already caused inevitable job losses and budget losses at all levels.
As the entire world is approaching a new crisis with social impacts still unpredictable due to the losses caused by the COVID-19 response, other countries have already launched multi-billion programmes to support their economies. Ukraine does not have sufficient financial reserves, and short-term tax and other easings introduced for business will not be enough for its full recovery, which is why it is time to take more comprehensive action already now.
As the SUP survey shows, 29% of entrepreneurs stopped working (micro and small business). A third of all business owners (mostly micro business) reported a dropdown in their revenues by 90-100% since the lockdown and staff reductions down to 50%.
The National Bank of Ukraine has forecast a 5% fall in the country’s GDP in 2020. Taking into account the survey findings, the business community expects that the effects may eventually turn out even more pessimistic.
The immediate implementation is therefore required for those reforms that will help stabilize the economy and lay the foundations for its further growth, in particular, these are the following reforms:
- reduce the unified social contribution, in three stages, down to 10% (at the first stage: limit the accruable contribution down to two minimum wages (MW); at the second stage – down to one MW; and at the third one, the unified social contribution is 10%);
- create industrial parks in Ukraine (introduce the key factor that has boosted economic growth in Western Europe, the USA, and Asian countries);
- cancel utility connection charges (power, gas, water supply, etc., i. e. re-classify the connection charges as free administrative services);
- set up a single analytical body for white-collar crime investigations (liquidate the tax police and create a new authority with distinct powers and investigative competence with regard to crimes of economic, financial and tax nature);
- take up the “regulatory guillotine” strategy (review and abolish inefficient business regulations);
- introduce a moratorium for inspections until the year end (enable business to focus all available resources on overcoming the lockdown effects);
- replace a corporate profit tax by a tax on distributed profits for all businesses (encourage re-investments and reduce tax management costs);
- legalize medical cannabis in Ukraine (secure additional revenues for the country’s economy and remove barriers for a huge number of sick people in receiving proper treatment);
- legalize gambling in Ukraine (facilitate filling of the state budget);
- simplify the business lending procedure (allow private businesses to give interest-based loans to each other without the need to apply for the financial company status);
- temporarily introduce tax anticipation bills (enable importers that have impeccable reputation at the customs, to issue bills due on 1 March 2021 and binding them to repay their liabilities to the government only in ready money).
Some of these reforms have long been the subject of discussion by the governmental authorities and business community, but due to a lack of political will, they haven’t been yet implemented. Some are new solutions that are based on international experience and promise great economic potential for our country.
We call on all branches of power to undertake systemic steps already now in order to mitigate negative impacts of the pandemic at the national level and stabilize the Ukrainian economy. SUP remains committed to work together on the legislative solutions enabling to implement the reforms and further to accelerate economic growth.
The petition has been supported by members of the united business community COVID-19 Business Headquarters:
Union of Ukrainian Entrepreneurs (SUP)
Ukrainian Association of Furniture Manufacturers
West Ukrainian Business Club
We Khersonians Business Association
Vinnytsia Business People Club
Bukovina Entrepreneurs Club
MriyDiy Business Club
Board Business Community
