Head of Rada Committee Hetmantsev advocates lowering income tax after war

Administration of the income tax in Ukraine is less effective than the value-added tax, it will be improved, in some cases accompanied by the introduction of a minimum tax liability, and after the war it would be necessary to consider lowering the income tax rate, said Danylo Hetmantsev, head of the parliamentary committee on finance, taxation and customs policy.

"If we talk about income taxation in general, then I, especially for the post-war period, would advocate reducing this tax amid the single social security tax reform, against the backdrop of a progressive scale for personal income tax. I would settle on a 10% rate of corporate income tax," he said in an interview with Interfax-Ukraine.

In his opinion, this would stimulate economic development and would correspond to some positive examples of European countries.

"And it would stimulate businesses to abandon common practices of reducing the tax base, which, unfortunately, they use en masse today," Hetmantsev added.

Commenting on the introduction of the minimum tax liability in the payment of income tax for petrol stations, the head of the committee reminded that earlier such a mechanism had already been applied to currency exchangers, as well as in agriculture, where it would be improved.

"The principle that we introduced – taxation based on external signs – smacks of archaism. And it is less fair than taxation of income as such. But the circumstances in which we find ourselves, when the entire market, with the exception of two or three enterprises, evades paying income tax, force us to apply simplified methods of taxation based on external signs," Hetmantsev explained.

According to him, in the case of exchangers after the adoption of the relevant law, the tax collection increased to about UAH 30 million per month, while in 2021 only UAH 7 million was paid for the whole year.

The head of the Committee explained the complexity of income tax administration that the tax period is annual, so in order to "catch up" with the object of taxation, it is necessary to conduct an audit several years after the profit has already earned.

"In rare cases it is difficult, in other cases it is impossible," he pointed out.

Hetmantsev added that it is physically impossible to catch up with everyone with checks and audits, and if 15% of enterprises are checked during the year – this is not a bad indicator, while all the rest are not physically checked, which is taken advantage of by unscrupulous taxpayers.

"Thirdly, it is the difficulty of proving tax evasion on corporate income tax and the variety of ways that businesses use to reduce the object of taxation, which, unfortunately, is quite difficult to prove in the courts and tax audit," the head of the committee also explained.

Speaking about the extension of the minimum tax liability mechanism to other markets, he reminded that the president is expected to sign the already adopted law on taxation of the alcohol market based on the capacity of enterprises.

Recently, the head of the ruling Servant of the People faction, David Arakhamia, registered a draft law, which is now at the committee, on taxation of tobacco production also based on the volume of raw materials imported into Ukraine by producers, Hetmantsev added.