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09.04.2020

The Business Ombudsman Reports on Results of 2019

While the coronavirus is changing our lifestyles and reformatting the workflows, the Business Ombudsman is still ready to help entrepreneurs who face malpractice of state bodies. The BOC continues to operate normally in the remote regime and handle complaints, some of which already address new business issues and changes in legislation related to COVID-19. To keep up with regular tasks, the Council has prepared the summary of its operations in 2019.
The Business Ombudsman Council received 1646 complaints from businesses concerning malpractice of state bodies and closed 1139 cases. The institution helped companies to recover UAH 4.6 bn – the record annual financial impact. 97% of complainants, who replied to our request for feedback, were satisfied with our service.
Complainants’ portrait. Over two thirds of complaints (68%) were lodged by SMEs, the vast majority (84%) originated from Ukrainian local enterprises. The most active industries were:Wholesale and Distribution (26%), Manufacturing (14%), Real Estate and Construction (10%), Individual Entrepreneurs (9%) and Agriculture and Mining (8%).
Complaints’ trends. Every fourth complaint lodged with the Council related to challenging tax inspections results – their number increased by half as compared to the previous year. Inclusion of companies in high-risks taxpayers list without any reasonable explanations, as well as no explanations how be excluded from these lists was an issue of particular concern for entrepreneurs. Failure to comply with court decisions, mostly on tax issues and law enforcers’ actions resulted in businesses being unable to operate properly. At the same time, entrepreneurs complained less about all law enforcers without exception.
Cooperation with state bodies. State bodies implemented 90% of the Council’s case-by-case and 37% of systemic recommendations. Some systemic wins the Council made in 2019 thanks to recommendations are:
•    The threshold amount of actual sums unpaid to the budget triggering treatment of such action as a criminal offence under Part 1 of Art.212 of the Criminal Code of Ukraine was increased from UAH 960 500 to 2 881 500. Such a change should considerably reduce pressure on business.
•    Cancellation of mandatory equity contributions for infrastructure development during construction contributed to removing additional obstacles for investors and corruption instances for local officials.
•    Introduction of post-clearance audit – a special procedure, which, in certain cases, may be applied instead of the customs procedure on the border to speed up the customs clearance and considerably reduce the administrative pressure on business.
•    Assigning postal addresses to new real estate objects according to a new procedure would allow to cease malpractice and intensify new real estate objects registration process.
•    Restoration of territoriality as one of the principles of state registration of rights under “Anti-raidership Law 2” will facilitate property rights protection.
To refresh and make our cooperation with government agencies more effective, in 2019 the BOC signed three new Memoranda of Cooperation with the Prosecutor General’s Office of Ukraine, the State Tax Service and the State Customs Service. 
Monitoring new systemic issues of business, the BOC has prepared two sets of recommendations to state bodies:
•    Report on “Administrative Appeal: Current State and Recommendations” is focused at improving the existing state of administrative procedures. It is vital both for business and state, to streamline procedures allowing to eliminate defects created by state apparatus promptly and without excessive costs.
•     The report on “Big Challenges for Small Business”, evaluates implementation of the government SME Development Strategy 2020 and provides several updated policy recommendations for SMEs operating conditions improvement.
‘The year 2019 was a year of changes and reforms brining macroeconomic stability and some improvement in the business environment the country. 2020 will be a year of severe and unprecedented challenges for businesses in the context of combating coronavirus effects. For our part, we stay committed to safeguarding businesses, continue working and encouraging entrepreneurs to seek help in case of state bodies malpractice. We will do our best to protect the legitimate rights of businesses in these difficult times’, stressed Marcin Święcicki, the Business Ombudsman.
A full version of the annual report in Ukrainian and English is available here.
 

Next news: The number of complaints from business goes up in Q1 2020