On October 10, the Union of Ukrainian Entrepreneurs (SUP) organized a roundtable discussion “Qualitative regulation: the point of view of business”. Representatives of the government (the Ministry of Economic Development and Trade of Ukraine (MEDTU), the Committee of the Verkhovna Rada of Ukraine on Taxation and Customs Policy, State Regulatory Service, BRDO, the Reform Support Office of the MEDTU) and the member companies of the SUP took part in the discussion of regulatory issues.
Within the framework of the event, business representatives talked about recent successes in the field of regulation of their markets, shared their thoughts about ongoing issues, and suggested ways to solve problems in the context of qualitative regulation, in particular, they drew attention to the need of considering and adopting top priority initiatives in the business.
The logistics market was represented by Andriy Ivasiv, co-founder of Delivery Group, Chairman of the SUP Committee on Transport and Logistics. The speaker highlighted the positive developments that have already been made in that field, in particular the introduction of an “single point of contact” at the customs office and e-document management with the possibility of filing an electronic declaration with the customs office. Among the most anticipated initiatives of the entire business, Ivasiv named the replacement of income tax with a tax on capital withdrawal.
“The final version of the bill that the Ministry of Finance proposed for consideration by the IMF is neutral and zero in its impact on the budget. However, we have a categorical no, justifying it with an untimely change in tax policy. Unfortunately, for a long time nothing has been done in order to change this opinion of the IMF and smoothly introduce a tax on capital withdrawal. It seemed that the direct norm, which we prescribed in the Tax Code – by July 1, 2018, the government had to develop and submit a section on the replacement of the income tax with the tax on capital withdrawal – would be confirmation for the IMF that this was an unchangeable path of our country. However, it turned out to be not quite so, and today this is one of the main issues that is delaying the signing of the Memorandum with the IMF,” – the Chairman of the Verkhovna Rada Committee on Taxation and Customs Policy Nina Yuzhanina said in this context.
Regarding the reforms expected by the logistics industry, Mr. Andriy emphasized the importance of introducing electronic waybills.
“We support the introduction of electronic waybills. The draft order of the Ministry of Infrastructure of Ukraine, which will introduce the possibility of drawing up a waybill in the form of an electronic document, will be sent for approval next Monday. Therefore, we expect its adoption in November,”
– Maksym Nefyodov, First Deputy Minister of Economic Development and Trade, noted. Nina Yuzhanina, in her turn, invited the SUP experts to join the work of the Committee’s working group and to present the initiative of the SUP’s Transport and Logistics Committee on electronic waybills at the meeting next week.
Key point issues that are currently worrying the telecommunications market have been voiced by Oleksandr Kohut, the Director for Regulatory Support at Kyivstar. As an example of good practice in the industry, the speaker noted the well-coordinated work and open dialogue between the telecommunications sector and the National Commission for the State Regulation of Communications and Informatization (NCCI) as a regulator of the telecommunications market in the introduction of new generation 3G and 4G technology. Transparent adoption process, reasonable regulation, which corresponded to the best European practices, allowed the state to receive domestic investments: UAH 18.6 billion was paid to the state budget for licenses and frequency conversion, and UAH 26.4 billion accounted for the capital expenditures of mobile operators in the infrastructure for the introduction of 3G and 4G technologies during 2015-2018. Among the issues to be solved, Mr. Oleksandr highlighted:
• Bill No. 9085, which provides for an increase in the rent payment for the use of radio frequency resources by 9%.
“The amounts that the industry pays today for using radio frequencies in Ukraine are already 6% of the total annual revenue of operators. In Europe, the fee for using frequencies is less than 1%,” – the speaker said.
• The telecommunications industry does not receive VAT refunds for the export of its services, although it provides roaming services.
The authorities also noted that positive changes in the regulation of the telecommunications industry are taking place and there are more of them. And they advised the companies of the industry to communicate more closely with the Ministry of Finance of Ukraine on the above problematic issues.
Serhiy Badritdinov, CEO of Intertop, emphasized that honest business is in favor of the liberalization of fiscal processes, but also anticipates the modernization of these processes (payment transactions recorders of 3rd generation) and the introduction of electronic waybills.
“We are happy that Order No. 547 of the Ministry of Finance has already undergone all preparatory procedures and we expect it to be signed,” – Mr. Serhiy said in a positive light.
The most expected changes for the retail business are as follows:
- Abolition of Decree No. 436 of the President of Ukraine dated June 12, 1995, which provides fivefold fines for business for violating the requirements of the legislation in the field of cash circulation.
- Cancellation of the Book of Complaints and Suggestions. “This is an initiative of the SUP Committee for Retail Trade, and we are pleased that we see its support from the Ministry of Economic Development and Trade and from colleagues from BRDO”
- Business must duplicate the Ukrainian mark of product conformity with technical regulations near the European one (for example, on cell phones and other products).
Maksym Nefyodov and Nina Yuzhanina expressed their support for several initiatives, and in this context they talked about the need to introduce third-generation payment transactions recorders and priorities for the next year.
The speakers also discussed the interaction of government and business in the context of state regulatory policy, emphasizing the possibilities for effective examination of potential legislative innovations by entrepreneurs. Natalia Pronue, Director of Global Regulatory Strategy at JTI, also focused on this:
“One of the problems we face is legislative spam. The number of bills registered for the tobacco market defies explanation. This interferes with our daily operations. It is not enough to copy what has been introduced in another country. We have other realities, and they should be taken into account in an open dialogue. We, like nobody else, can tell, whether bill will work in practice, we can predict its consequences. It is very important to understand the goals of innovation – sometimes they are disproportionate. Proportionality arises only as a result of a transparent constructive dialogue,” – Natalia Pronge said.
Denys Shemyakin, Director of the Reform Support Team at the MEDTU, also spoke about how business can better convey its proposals. He advised the business to submit their initiatives clearly formulated, showing all the disadvantages and advantages, add more arguments and figures. The speaker also added that it is important to develop a win-win culture in relations with the authorities and between associations.
“A clear understanding of the level of risk and the importance of the issue is the only thing that will help accelerate the adoption of initiated draft laws,” – Mr. Shemyakin said.
The discussion turned out to be fruitful and balanced: we talked not only about the problems, but also about positive developments. We thank the participants for the candid dialogue. Working in this way, we will achieve positive changes!
