Tax problems with a focus on inspections, abuse of law enforcers and customs – this is what the second quarter of 2024 looked like for entrepreneurs, according to the Business Ombudsman’s statistics.
In addition to ongoing work on complaints (299 complaints were received and 185 cases closed in April-June 2024), in the reporting quarter the Council paid special attention to tax audits phenomenon investigation. Tax audits (54 complaints) are the second most common category of business appeals after SMKOR issues (99 complaints) in the “tax” complaints block of the quarter. According to new own-initiative investigation results, the Council found out that 99+% of tax revenues are generated precisely through voluntary tax payments, while the share of proceeds from additional reassessments as a result of inspections has, over the last 6 years, never reached 1% of total tax revenues. Therefore, the “tax audit”, without giving the taxpayer a chance for correction, serves as a tool of pressure on entrepreneurs and undermines trust in fiscal authorities.
According to the Business Ombudsman, civil servants should start with practical compliance with the “Consult First” principle. “The idea of this principle is successfully applied in other transition economies. If you, as a tax or customs officer, notice a technical error or a minor variance in the company’s declaration, do not immediately impose a fine. It is better to point out immediately what needs to be corrected, giving time to eliminate the problem. Such a compliance incentive will help save months or even years of administrative and legal wrangling currently draining the energies and resources of both business and the Ukrainian state,” notes the Business Ombudsman Roman Waschuk.
In a special report based on our own-initiative investigation results, the Council outlined a number of ideas that can contribute to building partnerships between business and the state. You can get familiar with the report by following the link.
Considering the culture of administration based on punitive approaches, BOC calls on state bodies to give life to good governance principles declared long ago in Ukrainian legislation and European integration documents. Implementing these ideas, as well as establishing relations between business and the state, is the key goal of the draft Declaration of Fair and Reasonable Administration developed by the Council. The document states that decisions of state bodies must be transparent, clear, reasonable and proportionate. Currently, the institution is actively promoting Declaration principles at the level of the Ukrainian Government and local government authorities.
The Council is boosting interaction with all the stakeholders involved in Ukraine’s European integration processes and its future reconstruction. As of the beginning of September, there was a rotation among the employees of the Council and new members joined the team. A recovery team is currently partially formed and a reconstruction related complaints category was integrated into the case management system. So these days, the Council is taking up on the first recovery complaints.
BOC works in normal mode. You can submit a complaint through the form on the website.
Read the quarterly report here.
