European Business Association Supports Tax Legislation but Raises Concerns

The European Business Association (EBA) has declared its conceptual support for three tax bills that are scheduled for consideration by the Verkhovna Rada of Ukraine. However, representatives of the association highlighted that they have comments and proposals for each of these bills, which were initiated by the Cabinet of Ministers of Ukraine. EBA experts conducted a detailed analysis of the proposed changes and shared insights from the business community.

The first of the bills is the abolition of the value-added tax (VAT) exemption for goods valued at no more than 150 euros (Bill No. 15112). EBA experts expressed their conceptual support for this move but also called for amendments to the Customs Code of Ukraine to ensure a streamlined procedure for administering the relevant customs payments. They noted, "The Association has repeatedly appealed to the Cabinet, Parliament, and other authorities to reconsider VAT exemptions on the import of goods valued at up to 150 euros. Such a step, in particular, will help align Ukrainian tax and customs legislation with European Union rules."

The second bill involves the implementation of international automatic exchange of information regarding income received through digital platforms (Bill No. 15111). The EBA believes that certain provisions of this bill require clarification, particularly regarding the definition of who is considered an operator of a digital platform and an accountable seller-business entity. Experts also deemed it impractical to introduce special bank accounts and disclosure of banking secrecy for accountable sellers of goods and services, as this could exacerbate social tension and distrust among the population.

The third bill pertains to the collection of military tax (Bill No. 15110). Association representatives argue that the configuration of the military tax should be considered in a broader context, alongside a review of approaches to taxing individual incomes and social insurance. They caution that continuing elevated rates without comprehensive changes may reinforce existing disparities and encourage further shadowing of incomes. Experts also noted that maintaining a high tax burden on the wage fund could slow economic growth and the recovery of the labor market.

The European Business Association emphasized that during the consideration of these bills in the parliamentary committee on finance, tax, and customs policy, lawmakers took into account some proposals from the business community, particularly when refining the bills on taxing digital platforms and abolishing VAT exemptions on imported goods. The business community will continue to monitor the further consideration of these initiatives in the Verkhovna Rada.

"Overall, the business community of the Association is interested in finding effective solutions to reduce the shadow sector and ensure a fair tax burden. In particular, in the context of legislative initiatives that prevent the use of a simplified taxation system for tax evasion. The Association consistently supports government measures aimed at creating equal conditions for business, increasing predictability in the tax and regulatory environment, and developing mechanisms to combat the shadow economy without undue pressure on honest taxpayers. An open and systematic dialogue between the authorities and business will contribute to the adoption of balanced decisions that combine fiscal efficiency with a favorable business climate," stated the European Business Association.

It is worth noting that the European Business Association previously opposed the Ministry of Economy's plans to reorganize the State Service of Geology and Mineral Resources by creating a State Agency for Natural Resources Management.