Government approves 5-year development strategy for tax ministry

The Cabinet of Ministers approved a Strategic Plan of Development for Ministry of Revenue and Duties of Ukraine till 2018. The document defines a set of eight strategic directions for development of the Ministry, detailed by strategic goals, algorithms, and implementation deadlines, the Information-Analytical Bulletin of the Cabinet of Ministers of Ukraine informs.

Experts say the document was developed in cooperation with consultants from international audit company Price Waterhouse Coopers, and received a positive feedback from the World Customs Organization (WCO).

According to Strategy, in the next five years, Ministry of Revenue will focus on improving the tax and customs services, development of partnership with citizens and business, fight against corruption and "shadow" sector of economy, and introduction of modern IT technology.

Experts say improving the administration of tax payments occurs in Ukraine simultaneously with tax and regulatory reform. In particular, over the past three years (since coming of Tax Code into effect), the number of fees and taxes was reduced from 44 to 23. Also, the number of national taxes was decreased from 29 to 18. And number of local taxes was reduced from 14 to 5. Also, the income tax rate was cut (2011 – 23%, 2012 – 21%, 2013 – 19%).

Firstly, positive results of reform were felt by small and medium sized business. This is evidenced by increased level of voluntary tax payment and positive dynamics of small businesses development. In particular, in the 7 months of 2013, businessmen working under simplified taxation system, paid to budget over 2.8 billion UAH. This is up 53.3% from last year, note the government analysts.

Also, since the beginning of 2013, the number of simplified businesses in Ukraine is up 22%.

"If, at the beginning of the year, there was about a million of businessmen working under the simplified taxation system, today, there are 1.258 million of them. So, the increase is almost 22%," noted Oleksandr Klimenko, Minister of Revenue and Duties of Ukraine.

Ukraine’s success in liberalizing the taxation and tax administration is also noted by international observers. For example, the World Bank included Ukraine in the list of three countries, which, for the last 8 years, have significantly reduced the amount of time required for fulfillment of tax obligations. Thus, in terms of "time spent for tax reporting", experts of the World Bank noted reduction from 657 hours in 2011 to 491 hours in 2012.

Given the completed tax reforms, improvement of simplified taxation system, and development of electronic declaration, the government analysts confidently forecast further climbing of Ukraine in the international comfortable business management rankings.

Even today, upgraded tax services help to process business applications for VAT refunds. For example, in 2012, with claim of 43.4 billion UAH, actual refund was 46 billion UAH. As of Oct. 1, 2013, with claim of 39 billion UAH, refunds totaled 42.8 billion UAH.

Starting next year, the Ministry is planning to introduce a practice of electronic documentary audits, which will allow the low-risk taxpayers to be audited remotely. It is envisioned that, since Jan. 1, 2014, this service will be used by single tax payers working under simplified taxation system. Since Jan. 1, 2015, the service will be available to any small and medium-sized business working under common taxation system, and from Jan. 1, 2016, to all categories of taxpayers.