Unions of entrepreneurs, business associations and individual entrepreneurs will gather outside the Verkhovna Rada on May 16 at 9:00 to demand adoption of the draft law on the replacement of the income tax with the tax on withdrawn capital. Entrepreneurs will require the Chairman of the Verkhovna Rada to put the relevant legislative initiative on the upper part of the parliament’s agenda. This was stated by Samopomich MP Tetiana Ostrikova.
According to the parliamentarian, the entire Ukrainian business is expecting the abolition of income tax and its replacement with the tax on withdrawn capital. And over the past four years this has become the national idea of Ukrainian business.
The parliamentarian notes: “Today, countries are competing with each other – they are reducing taxes in order to attract investors. Unfortunately, Ukraine is not participating in this competition. Unfortunately, we do not have fair trial, protection of intellectual property or effective work of law enforcement agencies to effectively compete. Therefore, the only things that can help us compete today are the tax rates and our human capital.”
If we talk about the practical implementation of the tax on withdrawn capital, then the tax will be levied on incomes that are withdrawn from enterprises either in the form of dividend payments, or in the form of operations equivalent to the dividend payment. In particular, we are talking about transferring funds abroad to low-tax offshore jurisdictions.
Such a practice will result in a number of positive consequences for Ukraine. First of all, this will make life easier for our entrepreneurs and will improve the tax climate for Ukrainian business, which will entail the growth of domestic investment. Secondly, this will create competitive advantages for the cases when investors will be choosing in which countries to start business. Thirdly, the tax on withdrawn capital will make operations that some unscrupulous enterprises carry out with their companies registered in low-tax or offshore jurisdictions economically unprofitable.
Why should the Verkhovna Rada adopt the bill tomorrow? It is the current President of Ukraine Petro Poroshenko who is the subject of submission of the law. In accordance with the Rules of the Verkhovna Rada, after the newly elected President Zelensky is sworn in, all bills submitted by President Poroshenko can be considered rejected. “That is why the business began to sound the alarm,” explains Tetiana Ostrikova.
The MP concludes: “This works in Estonia, Latvia, Georgia. All wise countries have this. Ukraine is lagging behind today. We will not let politicians turn a blind eye to an important problem tomorrow.”