The Union of Ukrainian Entrepreneurs (SUP) calls on the government, besides effective measures to protect the population against COVID-19 infection, to take immediate steps to prevent or limit the negative impact of the disease on the activities of Ukrainian enterprises and to protect the most affected companies and their employees.
We offer to urgently start discussing emergency stabilization measures, as the development of the crisis related to a coronavirus infection will lead to breaking the supply and production chains, loss of service companies and, consequently, the following possible factors:
- suspension of activities of enterprises in connection with the introduction of justified measures by the Government (quarantine);
- companies representing small and medium business that do not have budget financing are at risk of bankruptcy;
- late payment of rent and wages which will adversely affect those who receive these payments;
- increase in mutual debts because of shortages and violation of commodity-money circulation;
- refusal of signing new contracts, cancellation of deliveries under already signed contracts;
- full use of warehouse inventory can lead to production stoppages and job cuts;
- decrease in business activity will lead to a decrease in cash flows which provokes defaults on liabilities (payments on loans, paying taxes).
The SUP calls to immediately begin a dialogue between government and business to anticipate and assess the risks of a rapidly changing environment. Taking measures to support business and protect employment is obvious in this situation. Such measures are:
- reduction of taxes and compulsory payments, cancellation of advance payments;
- replacement of income tax with exit capital tax;
- vetoing of Law No. 1210 “On amendments to the Tax Code of Ukraine related to the improvement of tax administration and elimination of technical and logical inconsistencies in the tax legislation”;
- introduction of a moratorium on inspections;
- introducing “tax holidays”: extension of deadlines for paying taxes and deferral of obligations of filing tax returns and paying taxes for enterprises and individuals for three months;
- unblocking tax notes which are the court’s decision in favor of the taxpayer and stop the practice of unjustified blocking;
- delaying customs payments and value-added tax on import of components for production for three months;
- introducing temporary exemptions for companies facing reduction in revenues and profits in result of actions taken by the government to combat the pandemic, such as:
1) partial compensation for losses, reimbursement of interest payments on loans because of the temporary cessation of activity of enterprises as a result of the introduction of justified measures by the Government.
2) temporary complete abolition of single social contribution and income tax for enterprises that do not reduce staff in terms of downturn and downtime (otherwise fired employees will address the employment centers).
The International Monetary Fund (IMF) claimed that “considering the wide coverage of the epidemic in many countries, cross-border economic relations and significant consequences for trust, which affect economic activity and financial and commodity markets, the argument for coordinated international response is obvious. The international community should help countries with health care disabilities to prevent a humanitarian catastrophe. The IMF is ready to support vulnerable countries through different lending mechanisms including the rapid allocation of emergency funds which can reach up to $ 50 billion”.
We call on the Cabinet of Ministers of Ukraine to immediately start negotiations with the IMF to resume cooperation and obtain the financial assistance necessary for Ukraine to overcome the economic impact of the coronavirus pandemic.
