Making reforms by Natalie Ann Jaresko

Making reforms is an extremely complex and rather long process consisting of a huge amount of daily decisions, discussions, studies, and then even more decisions. Some reforms take months from their inception to the adoption of the necessary legislation by Parliament. Other major reforms move due to numerous day-to-day technical solutions that are invisible to outsiders. As the public do not get the chance to see that process in detail, they may complain of lack of reforms.

So let me tell to you what the Ministry of Finance does in its everyday life, what progress we have made in reforming our country since the beginning of July, and how all of this helps to improve the situation in our country.

We have made much headway on de-shadowing the Ukrainian economy.

Firstly, on July 1 electronic VAT administration came in force. It helps to fight tax avoidance which costs the economy ~2 bln UAH per month, according to the SFS estimates. Once added to the budget, these funds will help to tackle our nation’s budgetary needs.

Secondly, we agreed with MPs on the mandatory application of cash registers. Beginning with July 1, their usage became mandatory for taxpayers of the 2nd and 3d groups of single tax. This will significantly reduce the shadow economy, protect the rights of consumers and ensure a significant transition of business in Ukraine up to European standards. Simultaneously, we agreed only those businesses whose income exceeds 1 million UAH per year will need to use cash registers.

Thirdly, after lengthy negotiations, we have finally made an important step in the fight against capital flight to tax havens. In particular, we agreed with the Government of Cyprus to revise the rates under the Treaty for the avoidance of double taxation. These tax provisions comply with the recommendations of the OECD.

At the same time, I have to say that this week, unfortunately, we were not able to move forward in adopting 4 very important draft laws that will help Ukraine to protect people’s savings, to improve our energy sector, and to help to proceed in our relations with the IMF, the World Bank, as well as to receive loans from Japan and Germany. These four draft laws, which open up $3.2 bln in financing for Ukraine, should be adopted by the Verkhovna Rada. Thus we urge MPs to adopt these bills first thing on July 14th – as soon as the next plenary session begins.

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