The good news: the rights of companies are violated far less blatantly in Ukraine than before. The bad news? The violations that do occur are becoming far more complex and subtle.
That’s according to Algirdas Semeta, Ukraine’s business
ombudsman and head of the Ukrainian Business Ombudsman Council, who reported on
May 24 in Kyiv on the work of his team in the first quarter of 2016.
After a year of work, Semeta and his team are now receiving
more complicated complaints that require a lot of investigation to figure who
is right, and who is in the wrong, the ombudsman said during his presentation.
While there still are some blatant violations of companies’
rights, more and more complaints are connected to the actions of the anti-monopoly
committee, cartel agreements, public procurement tenders, and transfer pricing,
Semeta said.
He said this was partly due to business gaining trust in his
team over time. “This indicates that changes are taking place, although perhaps
not as fast as we expected,” he said.
Pointing to positive changes in Ukraine, Semeta said it was
easier to do business, and a new business can now be registered in just 24
hours, which is in line with international practice. The number of licenses and
permits required has halved. Value added tax refund discipline at the State
Fiscal Service has improved, although there is still little progress in
refunding VAT from previous periods.
However, “without key changes in tax legislation and the use
of criminal law, it is difficult to say there has been an improvement in the
business climate,” Semeta said.
The council received 139 complaints during the first
quarter, with 80 percent of the companies asking the ombudsman for help being
small and medium enterprises. Some 81 percent of the complaints came from Ukrainian
businesses, and the rest from foreign-owned ones. Twenty-seven percent of the
complaints came from industry, 22 percent from retail, and 20 percent from
agriculture.
The ombudsman and his team won Hr 215 million ($994,800)
back for businesses in the first quarter. Some 99 percent of that sum was VAT refunds
obtained from the State Fiscal Service with the help of specialists on the council.
The State Fiscal Service was the agency most complained
about by companies (84 complaints), on issues ranging from rights violations in
the electronic administration of the value added tax, unwarranted inspections by
the service, delays in VAT refunds, and the unjustified opening of criminal
cases against businesses by the service.
While Ukraine’s tax collectors are most frequently
complained about, the service is also the leader in meeting the ombudsman’s
recommendations. The institution has met a total of 72 of the 101 recommendations
made by the council. In contrast, the Prosecutor General’s Office has met just two
out of 11 recommendations.
Semeta also urged the authorities to implement the tax
reform, which has been stalled in parliament since last year. The government has
promised to amend the tax code by July, but Semeta warned that as no groundwork
has been done to prepare for the reforms, businesses would have little time to
adapt to the proposed changes.
The Business Ombudsman Council has an annual budget of €1.5
million, funded through the European Bank for Reconstruction and Development’s
multi-donor account. The donors are Denmark, Finland, Germany, Japan, the
Netherlands, Sweden, Switzerland, the United Kingdom, and the United States.
Kyiv Post staff writer
Olena Savchuk can be reached at [email protected]
