The number of complaints to the BOC is growing at a record high for the second consecutive quarter

In July-September 2021, entrepreneurs lodged 638 complaints with the Business Ombudsman Council, the largest number in the last three years, which is 20% more than in Q2 2021 and 45% more than in Q3 2020. It is noteworthy that the number of appeals has increased across all the most common subjects.  We completed the investigation of 373 cases – that is 30% more than in Q2 2021 and 36% more than in Q3 2020. Thus, in the reporting quarter the BOC helped businesses to return and save UAH 483 mn.
‘The number of business complaints to the BOC is growing rapidly and breaking records of previous years for the second quarter in a row. However, such an increase in the number of complaints, in my opinion, does not necessarily indicate a deterioration of the business climate in Ukraine. Undoubtedly, awareness of the Business Ombudsman Council activities among entrepreneurs is growing, our practical webinars for business and lawyers pay off. In addition, there is a high level of trust in the institution, many entrepreneurs turn to us again’, Business Ombudsman Marcin Święcicki pointed out.
 
Business complaints trends. Four blocks of appeals made up 90% of complaints:
Tax issues (65%). The number of business complaints increased by 19% compared to Q2 2021 and by 39% compared to Q3 2020. Failure to enforce court decisions on tax invoices registration (164 complaints) similarly to the previous quarter was the most common reason for applications from entrepreneurs. Suspension of tax invoices registration (75) by a wide margin became the second most common subject of appeals. Following the lifting of the moratorium, the number of complaints on tax audits also increased (56). As for inclusion in the risky taxpayers list, we received 36 complaints, 20 less than in the previous quarter.
 
Actions of law enforcement bodies (15%). Entrepreneurs complained more about law enforcement bodies: 33% more than in Q2 2021 and 64% more than in Q3 2020. Over half of appeals against law enforcers block concerned the National Police (42), one third – the Prosecutor’s Office (26 complaints), the rest – the State Security Service of Ukraine (9 complaints). Most of the complaints concerned prosecutions and inaction of law enforcers. Besides, business complained about Tax Police 21 times.
 
Actions of state regulators (6%) (including the AMCU, DABI, StateGeoCadastre, NKREKP) were in focus of 41 complaints, which is 58% more as compared to Q2 2021 and 95% more than in Q3 2020. In the reporting quarter, the number of complaints on other state regulators increased significantly, including the Ministry of Social Policy of Ukraine (10 complaints) and the Ministry of Economy of Ukraine (18 complaints). 
 
Actions of local government authorities (4%). In Q3 2021, the number of complaints increased by 10% compared to Q2 2021 and 64% compared to Q3 2020. Business appeals concerned, inter alia, problems with allocation of land plots (5) and obtaining permits (3).
 
Complainants’ portrait. Three quarters (73%) of entrepreneurs who appealed to the BOC were small and medium-sized businesses. The vast majority of applicants are Ukrainian companies (87%), only 13% of complaints came from companies with foreign investment. According to the industrial distribution, the representatives of wholesale trade (21%), agribusiness (18%), production (11%) of real estate for construction (8%), as well as private entrepreneurs (9%) approached the BOC most often. Due to intensification of Ukrainian regions, a share of the capital in the overall structure of appeals decreased – only 32% of complaints came from Kyiv.
Since its inception in May 2015, the BOC has received 1,595 complaints from entrepreneurs challenging decisions, actions and inactions of law enforcement bodies, comprising 16% of all appeals. In acknowledgement of the significance of this problem the Council issued its new systemic report called “ABUSES AND PRESSURE OF LAW ENFORCERS ON BUSINESS”. The BOC’S experts led by Iaroslav Gregirchak, the Deputy Business Ombudsman, comprehensively examined the most common violations and developed a package of 27 recommendations to the Ministry of Justice of Ukraine, the General Prosecutor’s Office of Ukraine and the Ministry of Internal Affairs of Ukraine.
The Report commences by reviewing the problems related to the stage when criminal proceedings are being launched. The BOC advocates for the need to ensure proper digitalization of the manner in which the data is entered with the Unified State Registry of Pre-Trial Investigations (USRPI). Thereafter the Council updated its previous recommendations aimed at alleviating pressure inflicted on business in lieu of (i) groundless launching of criminal proceedings based on allegations of tax evasion; as well as (ii) groundless denial to launch criminal proceedings.
The next chapter is focused on an inefficient (delayed) course of pre-trial investigation. The document commences by concentrating on (i) criminal proceedings launched prior to March 15, 2018, in whose regard the Criminal Procedural Code does not set forth deadlines of pre-trial investigation, thus resulting in such criminal proceedings becoming a convenient tool for inflicting pressure on business. While drawing attention to the lack of proper access to selected information about the course of pre-trial investigation, the BOC calls for the need to simplify both suspect’s and victim’s access to the USRPI. Afterwards the BOC advocates vesting the defence and injured party with the right to independently lodge motions with prosecutor or investigatory judge seeking extension of terms of pre-trial investigation. The chapter ends by focusing on the taxonomy of problems stemming from the current state of legal framework governing use of court-ordered/forensic expert examinations.
In the subsequent chapter discussing procedural abuses in course of pre-trial investigations, the BOC concentrated on the following taxonomy of this problem: (i) illicit retention of arrested property; (ii) transfer of materials of criminal proceedings from one body of pre-trial investigation to another; and (iii) practice of reiterative arrests. The Report ends with a comprehensive chapter focused on disciplinary liability of investigators and prosecutors. 
Q3 2021 report is available here.
The text of the systemic report is available upon request.