President Zelenskyy Meets with Ukrainian Entrepreneurs to Address Business Challenges Amid War and Discuss Tax Reforms
Mykola Siutkin
You do business, we mitigate risks | Business Investment Risk Advisor | Co-founder of S&P Agency | Attorney | Co-publisher LDaily | Ironman
In a meeting held at the President's Office, President Volodymyr Zelenskyy, along with key government officials, engaged with Ukrainian business representatives to understand the obstacles faced by entrepreneurs amidst a full-scale war and to prepare them for a return to pre-war taxation. The meeting aimed to identify business concerns and develop strategies to address them.
The decision to convene the meeting stemmed from President Zelenskyy's recent address to the Verkhovna Rada, where he emphasized the need for tax reform and outlined his vision of an automated, digitally-driven economy. However, due to the ongoing war and Ukraine's reliance on financial assistance from international donors, comprehensive tax reform was deemed unfeasible at present.
The meeting included around 35-40 companies and business associations, featuring representatives from various sectors such as logistics, agriculture, IT, and foreign companies. Notably, prominent oligarchs were not present, and the focus was on businesses that paid taxes and employed a significant number of Ukrainians.
Entrepreneurs voiced concerns regarding the actions of law enforcement officers, citing increased pressure on businesses. Instances of law enforcement officers conducting raids on businesses were discussed, and entrepreneurs stressed the need for a streamlined approach to investigations and the consolidation of search functions within a single body. President Zelenskyy acknowledged the complaints but stated that he could not directly intervene in law enforcement operations.
Other topics discussed during the meeting included the lack of transparency in asset management tenders conducted by the Asset Recovery and Management Agency (ARMA), issues with the State Tax Service, and the blocking of business tax invoices. Additionally, proposed legislation (draft law No. 8401) aimed at restoring pre-war taxation and reintroducing tax audits sparked debates among attendees.
Agreements were reached to extend the moratorium on tax audits for micro, small, and medium-sized businesses while reintroducing scheduled documentary audits for larger businesses. These changes, however, necessitate coordination with international partners, including the International Monetary Fund (IMF).
While the meeting primarily focused on addressing immediate concerns, President Zelenskyy expressed his support for future tax reforms, mentioning the concept of "10-10-10" and other potential changes. However, he stressed that such reforms would be pursued only after the war. The president also emphasized the need for an administration that eliminates the need for tax officers and customs officials, favoring automated processes.
As a result of the meeting, a coordination platform was established to ensure ongoing dialogue between the government and the business community, aiming to address issues promptly and foster collaboration. President Zelenskyy expressed his gratitude to Ukrainian businesses for their continued presence in the country, tax contributions, and job creation, highlighting their crucial role in post-war economic recovery.
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Following a meeting between President Volodymyr Zelenskyy and Ukrainian business representatives, Andy Hunder, President of the American Chamber of Commerce in Ukraine, expressed the Chamber's willingness to provide extensive support to the government in the area of judicial reform.
Hunder shared this commitment in a LinkedIn post, highlighting the Chamber's Legal Committee, which comprises over 1000 top lawyers. The meeting, which took place on June 29, addressed several key concerns of the business community.
During the meeting, Hunder expressed gratitude to President Zelenskyy for his leadership during the ongoing conflict and highlighted that despite the war, 84% of AmCham members are fully operational. However, he also mentioned that 49% of members have experienced damage to their facilities, while 32% have sadly lost employees.
Hunder emphasized the importance of national security and defense, rule of law, and judicial reform as top priorities for businesses in Ukraine. He also mentioned that 62 new companies joined AmCham Ukraine in the first six months of 2023.
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The issue of the illicit market, specifically illegal tobacco products, was discussed during the meeting. It was reported that the share of illegal tobacco products in the Ukrainian market was 20.2% in 2023.
Regarding tax rate reductions, Hunder noted that they are unlikely to occur during the war, in accordance with the IMF memorandum.
The meeting also addressed the concerns of businesses regarding pressure from law enforcement agencies. Dawn raids and inspections by armed law enforcement officers at the homes of businessmen were highlighted, and the President suggested the idea of having only one agency responsible for inspections.
Other topics covered in the meeting included the future role of ARMA (National Agency of Ukraine for finding, tracing, and management of assets derived from corruption and other crimes), Ukraine Invest, and VAT refunds. Hunder mentioned that National Bank resolution #187 and Government resolution #335 are likely to be reviewed.