Public statement of the SUP regarding the introduction of the tax on capital withdrawal

The Union of Ukrainian Entrepreneurs (SUP) is concerned that Bill No. 8557 has not yet been submitted for consideration to the Verkhovna Rada of Ukraine. Delaying the inclusion of this bill in the agenda of the meeting of the Verkhovna Rada of Ukraine destroys the hopes of the business to adopt and implement it from January 1, 2019.
The draft law on the replacement of income tax with the tax on capital withdrawal is the only draft, which was written by a wide circle of experts, was studied several times by various independent organizations, on which the development of business in Ukraine and positive changes in the national economy directly depend.
The SUP understands the lengthy and difficult process of negotiations with the IMF and the difficulties in finding compensators by reducing budget expenditures in the pre-election period, therefore we consider it acceptable to pay an advance of the tax on capital withdrawal. As we understand, this refers to the inclusion in the transitional provisions of draft law No. 8557 of the conditions for the obligation of the payers of #ToCW to make an advance payment of tax on capital withdrawal during the first year of implementation (2019) in the amount of 50% of the amount of tax liabilities on income tax for 2018, which, if not used during 2019, will be accounted for the purposes of paying tax liabilities on the ToCW in the following years.
Taking into account the possible compensators for introducing the tax on capital withdrawal from 2019, we inform that the Union of Ukrainian Entrepreneurs has a negative attitude towards the idea of ​​introducing ToCW only for small and medium-sized businesses. Such a step completely downplays the expected rapid investment effect from the ToCW implementation for the Ukrainian economy. The phased implementation will make it impossible to quickly reform the SFS of Ukraine, since the administration will not be simplified and on the contrary may become more complicated due to the need to exercise additional control between the payers of the ToCW and payers of the income tax. If large companies continue to pay income tax, this will “conserve” the inequality of taxation due to the optimization possibilities of income tax and the accumulated losses of such companies in the amount of UAH 1.3 trillion.
In addition, the SUP has a negative attitude to possible changes in the taxation of dividends paid by one ToCW payer to another TocW payer. We believe that such a system may lead to disputes with the tax authorities regarding the re-qualification of any transactions that will be carried out between related ToCW taxpayers to the transactions of paying dividends with the additional charge of tax liabilities.
We hope that the political will of the President of Ukraine to introduce a tax on capital withdrawal will be effectively implemented by the Verkhovna Rada of Ukraine, by adopting draft law No. 8557, and the Committee on Taxation and Customs Policy of the Verkhovna Rada of Ukraine will decide to support the bill on October 17 and send it accordingly for voting in the Verkhovna Rada of Ukraine.
Responsibility for the economic future of Ukraine and adoption of draft law No. 8557 lies with the legislative and executive branches of power, therefore we urge the President of Ukraine, the Prime Minister of Ukraine, heads of all factions of the Verkhovna Rada of Ukraine to consolidate their efforts and adopt the bill next week.