7th Kyiv Post CEO Breakfast dives into taxes, customs in Ukraine - Jun. 18, 2016

Participants of the 7th Kyiv Post CEO Breakfast, held in partnership with DHL Express Ukraine and Syutkin & Partners law firm on June 17, had plenty to talk about in discussing taxes and customs service in Ukraine.

These two areas are managed by State Fiscal Service of Ukraine head Roman Nasirov, who attended the breakfast at the Hilton Kyiv Hotel.

While Nasirov describes himself as a reformer and defends his record, he’s taken public criticism for being the opposite — for allegedly obstructing reforms to make the tax and customs service fairer, faster, more automated, transparent and less corrupt.

He’s gotten into publicized feuds with critics who include Yulia Marushevska, the head of the Odesa customs service, and Hennadiy Moskal, the governor of Zakarpattya Oblast.

Ukraine Business Ombudsman Algirdas Semeta, who also attended the breakfast, recently published findings that he received more complaints about the State Fiscal Service than any other government agency.

The issues discussed by participants included how to automate and simplify customs clearance to reduce chances for corruption.

Some see quick adoption and implementation of the European Union customs code as a solution. Other topics included how to improve training and salaries for customs employees to attract better talent.

Similar complaints are lodged against tax inspectors, prompting calls for clearer descriptions of their responsibilities and limits on their powers.

On the tax side, issues discussed included billionaire Igor Kolomoisky’s nearly $1 billion debt to Ukrnafta, the state-owned oil company, which in turns has racked up $700 million in debts — more than half of which is owed the state tax service.

More broadly, participants discussed how to create a tax system that would ensure everyone paid their fair share, that encouraged voluntary compliance and that was simple to administer to reduce opportunities for bribery.

Overall, Ukraine collects roughly $34 billion in taxes each year and governments spend slightly more.

A debate broke out over excise taxes on cigarettes and alcohol, two cheap vices in Ukraine.

Many officials and international organizations are pressing Ukraine’s leaders to sharply but steadily raise the excise taxes to increase state budget revenue, improve public health and — especially with Ukraine’s cheap cigarettes — reduce smuggling abroad.

Abolishing tax breaks for special interests also factored into the discussion.

Participants also assessed the effect of last year’s reduction in the payroll tax from 45 to 22.5 percent and whether it will achieve its aim of reducing tax evasion.

And, of course, the invited guests also talked about what to do with Ukraine’s deficit-ridden pension fund. Pension payouts amount to 13.4 percent of gross domestic product, a figure many economists think is unsustainable.

Some participants echoed recent public comments by Jerome Vacher, Ukraine country head of the International Monetary Fund, and Qimiao Fan, World Bank country director for Ukraine, Moldova and Belarus.

Vacher told the Kyiv Post in an recent interview that Ukraine should be “focusing on some particular key areas, particularly large taxpayers, for example, high net-worth individuals.”

Fan, meanwhile, told the Kyiv Post that Ukraine’s tax system unfairly benefits Ukraine’s powerful special interests, including oligarchs: “The biggest problem is the tax system has far, far too many exceptions, waivers and exemptions for special interest groups. Many of those tax laws in the past were tailor-made for special interest groups.”

The 14 participants of the 7th Kyiv Post CEO Breakfast, in partnership with DHL Express Ukraine and Syutkin & Partners law firm, on June 17 in the Hilton Kyiv Hotel included:

Vadim Sidoruk, CEO of DHL Express Ukraine

Natalia Osadcha, partner of Syutkin & Partners law firm

Roman Nasirov, Head of Fiscal Service of Ukraine

Algirdas Semeta, Ukraine’s business ombudsman

Tetiana Ostrikova, member of parliament (Samopomich Party)

Svetlana Mikhaylovska, deputy director of the European Business Association

Tanya Prokopchuk,vice president of policy at the American Chamber of Commerce in Ukraine

Yuriy Sorochynskiy, CEO of Nemiroff

Fortunato Guadalupi, general director of Terrafood

Jean Bagh, director of Kuttner

Anastasia Krasnosilska, project manger of the Anti-Corruption Action Centre

Brian Bonner, Kyiv Post chief editor