Ukraine’s Ministry of Revenues and Duties was established to provide a single entity to manage the country’s taxation and customs-duties activities. As Oleksandr Viktorovych Klymenko, Minister, points out, “The creation of this ministry was part of President Viktor Yanukovich’s drive to improve Ukraine’s business climate. With this ministry, the business sector now has a centralised source of information about taxation and customs policies and processes.”
The ministry’s tasks are to collect taxes, customs duties and social payments; provide services to individuals and businesses; and bring revenues to the state budget. To ensure balance and transparency, the Ministry of Finance develops customs and tax policies and handles overall budget planning while the Ministry of Revenues and Duties focuses on implementation and providing services.
Coordinating with EU on tax fraud
The Ministry of Revenues and Duties has already made great progress in simplifying tax reporting, upgrading services and fighting corruption. On a visit to the Brussels Press Club in June this year, Oleksandr Klymenko voiced his support for the European Council’s plan to coordinate different countries’ efforts to fight tax fraud and tax evasion. He said, “Ukraine plans to implement control mechanisms for transfer pricing. This will strengthen control over tax assets being diverted offshore and to low-tax jurisdictions.” He also noted that the Ministry of Revenues and Duties recently signed an agreement with the European Anti-Fraud Office concerning tobacco-smuggling from Ukraine to Poland, Hungary, Slovakia and Romania.
At the Brussels meeting, the minister outlined the positive changes Ukraine has already made in its tax system. The tax rate has been reduced from 25% to 19% and will be lowered to 16% in 2014, while the VAT rate will also be reduced from the current 20% to 17% next year. In addition, thanks to the Ministry of Revenues and Duties’ simplification of tax-reporting procedures, including its introduction of an e-payments system, the average time it takes an entrepreneur in Ukraine to complete tax-related paperwork has been reduced from around 650 hours to 300 hours per year. This is not far from the European average of 267 hours. Customs-clearance times have also been reduced from an average 24 hours to four hours.
Through its efforts to streamline Ukraine’s tax and customs systems and bring them up to EU standards, the Ministry of Revenues and Duties is enhancing Ukraine’s investment appeal and strengthening its ties with the EU.