Business Ombudsman: “Despite business slowdown, we receive more complaints”

Despite the fact that COVID-19 lockdown forced companies to reduce the business pace, the number of appeals to the Business Ombudsman Council regarding violations of state officials keeps on growing. In July-September 2020, we received 439 complaints — this is 14% more than in Q2 2020 and 3% more than in Q3 2019.

Ukrainian small and medium-sized businesses sought our support the most. 9 out of 10 complaints came from Ukrainian companies, only 10% of complaints were filed by companies with foreign investment. The share of SME was 79% of total appeals. Almost half (49%) of appeals came from Kyiv and Kyiv Oblast, among other TOP-5 Oblasts are: Dnipropetrovsk (9%), Kharkiv (8%) and Zaporizhia (5%). The most active industries as for the number of complaints were: wholesale (28%), agribusiness (13%), real estate and construction (10%), manufacturing (10%) and individual entrepreneurs (10%).

In Q3 2020, the BOC helped entrepreneurs recover and save UAH 299 mn. The vast majority (98%) of applicants who provided their feedback were satisfied with cooperation with the BOC.

Key trends of appeals to the BOC in Q3 2020:

A systemic issue the BOC draws attention to is non-enforcement of court decisions. During five years of operations, the institution considered 564 complaints on this subject. Moreover, recently the number of appeals has doubled annually: from 56 in 2017 to 197 in 2019; during 9 months of 2020, 149 complaints were received. Non-enforcement of court decisions by state bodies is a significant problem for business, as enforcement mechanisms applicable to individuals and legal entities are not working in the case of public authorities responsible for court decisions execution. The BOC is preparing a systemic report on this topic – to be published in early 2021.

State bodies have implemented 89% of the BOC individual recommendations. Certain systemic wins are:
The BOC continued working with deputies to enshrine the Business Ombudsman Institution status in the law. Experts from Koretsky Institute of State and Law analyzed the Draft Law No.3607 and supported its key provisions. Presently, the document is in Parliament awaiting its first reading at the plenary session. So far, three Verkhovna Rada Committees have supported the bill: the Committee on Economic Development, Committee on Anti-Corruption Policy, and Committee on Ukraine’s Integration into the European Union.

The Q3 2020 report is available here.

  • The number of entrepreneurs’ complaints about tax invoices suspension increased significantly (from 138 in Q2 2020 to 201 in Q3 2020) – this is 46% more than in the previous quarter and 118% more than in the same quarter last year.
  • Meanwhile, the number of appeals concerning tax inspections went down significantly (from 55 to 36) – which correlates with the moratorium on most inspections introduced by the Government in March 2020.
  • Compared to the previous quarter, entrepreneurs complained more about procedural abuse of the Prosecutor’s Office, but less about malpractice of the National Police and the State Security Service of Ukraine. Therefore, the total number of complaints about law enforcement bodies remained flat at 48 complaints.
  • The number of complaints regarding delays in customs clearance has doubled (from 13 to 22). Thus, customs issues hit the TOP-3 list of business appeals.
  • Entrepreneurs filed twice more (from 8 to 16) complaints concerning the Ministry of Justice actions: both against the State Registration Department and the Enforcement Service.
  • Adoption of the Law No.776-IX aimed at de-shading of the market and increasing transparency of scrap metal import and export in accordance with our recommendations  on foreign trade in scrap metal.
  • The Law No.2698 signed by the President to harmonize construction products domestic market functioning with European rules – exactly as recommended in the systemic report.

Next news: Deputy Business Ombudsman Tetyana Korotka attended the meeting of the STS Board