Q3 2018: Volume of complaints from business continues to decline

In the reporting quarter, the Business Ombudsman Council received 308 complaints from entrepreneurs against malpractice by state bodies, which is 25% less than in Q2 2018 and 52% less than in Q1 2018. The majority of the 303 resolved cases were closed with the immediate desired result for complainants or recommendations to the agencies. In over three and a half years of work, the Council has submitted 2040 recommendations, 93% of which have already been implemented by the targeted state agencies. The level of satisfaction among complaining businesses also remains high – 95%.
The direct financial impact in Q3 was an estimated UAH 390 million. Total result since the BOC launched operations is now over UAH 13 billion. In addition, the Council stopped dozens of kinds of malpractice among state agencies and their employees, it helped businesses to get criminal cases closed, to submit tax reports, to obtain permits and licenses, etc.
“We have seen a decrease in the number of complaints for the third consecutive quarter. It’s too early to speak about tectonic changes in the work of state bodies, but we can see positive developments in their operational processes,” notes Business Ombudsman Algirdas Semeta.
The key types of complaints have been the following:
• Tax issues – 48% of complaints. As compared to Q2 2018, the share of tax issues has dropped by 14 pp, mainly due to a reduction in complaints regarding tax invoice suspensions. This clearly indicates improvements of their automatic registration system. The number of complaints concerning tax inspections has gone down by 27%, regarding electronic administration of VAT – by 60%. At the same time, in the reporting quarter, businesses lodged more complaints regarding criminal tax cases and VAT refunds.
• Law enforcement agencies – 19% of complaints. The number of business appeals against malpractice on the part of law enforcers has decreased by 9% compared to Q2 2018. However, this reduction is mainly in complaints about inaction. The number of complaints about procedural abuses has gone 14% up and appeals over unwarranted criminal cases against businesses are 18% up.
• State regulators – 8% of complaints. The number of complaints against actions by state regulators went down compared to the previous quarter by 14% and for the same reporting period in 2017 by 24%.
In Q3 2018, the Verkhovna Rada adopted the law (known as #MaskShowStop-2), to expand mechanisms for challenging malpractice by law enforcement officers and bringing such people to justice. As proposed in the report on raidership, the Ministry of Justice implemented a mechanism under which state registrars are no longer able to carry out registration actions with immovable property in breach of territorial rules. In line with recommendations presented in reports on international trade and customs, the law introducing a “single window” approach to customs clearance came into effect.
During the reporting period, the Council visited 8 oblasts within the framework of regional compliance seminars initiated by the Ukrainian Network of Integrity and Compliance. BOC specialists presented best anti-corruption practices and encouraged owners to conduct business transparently.
This quarterly report includes a special section devoted to an analysis of the characteristics of appeals submitted by SMEs (71%) vs. large companies (29%).
84% of complainants were Ukrainian enterprises. Foreign companies filed only 50 complaints with the Council in the reporting period, which has been the lowest figure in the last two years. The industries that lodged the most appeals were: wholesale and distribution (25%), manufacturing (12%), agriculture and mining (9%), real estate (7%) and individual entrepreneurs (9%). As usual, the share of complainants from Kyiv is the largest (37%).
The full version of the quarterly report in Ukrainian and English is available on the Business Ombudsman Council of Ukraine website at: https://boi.org.ua/en/reports-categories/quarterly-reports/