Business worsens assessment of current state of taxation in Ukraine – EBA poll

The European Business Association (EBA) together with EY Ukraine has conducted a new wave of the Tax Index for the second-third quarters of 2020 interviewing 91 tax and financial experts from EBA member companies that results in 2.90 points out of 5 possible (2.95 in the previous period). It means that the integrated index continues to remain in the negative plane.

"The results of the Tax Index show the disappointing stability in the assessment of tax experts for the second year in a row. Thus, throughout the history of the study starting from 2011, the index has never crossed the 3-point mark," the EBA said on Monday.

Among the components of the tax index, the quality of tax legislation receives the worst score, namely, 2.74 points, while the situation regarding fiscal pressure has the best result – 3.13 points out of 5 possible.

The number of respondents who reported significant displays of pressure has increased to 32% (24% in the previous period). Another 23% of respondents reported that they barely experienced any fiscal pressure, and 18% did not notice any signs of pressure. The previous wave of the survey showed 49% and 11% results, respectively, according to the EBA.

The respondents named the following fiscal pressure methods like the ones still imposed on the business: unreasoned interpretation of tax legislation by regulatory bodies and non-acceptance of explanations forcing companies to apply to court; "proposals" to pay in advance; delayed reporting due to technical failures of the STS server causes penalties; accrual of controversial penalties, burdensome inspections, etc.

"Although the majority of respondents, namely 52%, indicated a satisfactory level of services, the number of satisfied taxpayers decreased to 24% against 32% in the previous period. The number of dissatisfied also increased to 24% (17% at the beginning of the year)," the association said.

EBA Deputy Director for Advocacy Svitlana Mykhailovska said that this year, many radical changes were adopted in the taxation system, which, of course, added some problems to companies, so it is not surprising that tax experts complain about the lack of understanding of the rules and the absence of their clarifications.

The majority of respondents, namely 60%, assessed the preparation of tax reporting and tax administration at a satisfactory level, while 30% believe that it is burdensome. Only 12% of respondents consider this procedure easy.

The EBA Tax Index has been conducted since 2011.During the calculations, traditionally four criteria have been taken into account: the quality of tax legislation; complication/easiness of the tax administration; fiscal pressure; and the quality of the fiscal services.

Source: www.en.interfax.com.ua