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Complaints from businesses are on the rise again

07.02.2019

After three consecutive quarters of decline, in Q4 2018 the number of complaints from businesses went up again. The Council received 427 appeals, which is 39% more than in the previous period. 

In Q4 2018, the BOC closed 236 cases. The Council was able to assist businesses to resolve dozens of cases of abuse by state agencies, to close unjustified criminal cases, and to obtain permits and licenses. The financial impact for businesses was worth UAH 275 million, for a cumulative total of over UAH 13.35 billion since the BOC began operating.
Although it’s not an executive body, the BOC uses legal arguments and its established reputation to persuade government agencies to follow its recommendations. By the end of Q4 2018, state agencies had implemented 94% of all BOC recommendations and the satisfaction level of our complainants was 97%.

Three key groups of complaints submitted to the Business Ombudsman Council constituted 82% of all cases:
•    Tax issues (62%). The majority of appeals lodged by businesses against state agencies involved abuse on tax matters. Remarkably, in Q4 2018, the BOC received 80 complaints against tax inspections — an all-time high since the Council began operating. Although tax invoice suspension issues seemed to have been solved with the re-launch of the automatic registration system earlier in 2018, the number of complaints on this issue went up again in Q4.
•    Actions of law enforcement agencies (14%). Businesses lodged 30% more complaints against the National Police, compared to Q3 2018 and 11% more compared to Q4 2017. This rise was caused by both procedural abuses and failure to take action. On the other hand, appeals against the Prosecutor’s Office and the State Security Service were down compared to both Q3 2018 and Q4 2017.
•    Actions of state regulators (6%). The Council received fewer complaints in this area and the proportion dropped by 2 pp, to 6%.

The focus of the presented report was a comparative analysis of complaints lodged by companies in various sectors of the economy. It revealed that wholesalers and distributors most often complained about tax issues (72%) and customs issues (6%). Agribusiness faced problems with state regulators (12%) more than other sectors, while real estate companies complained the most about local councils (12%). In 2018, manufacturers became a subject of law enforcers’ particular interest (17%). Individual entrepreneurs were marked by the highest share of complaints against law enforcers (18%) and they were also very active in suggesting amendments to legislation (10%).

The Council has developed a new package of recommendations for state bodies in its systemic report on labor issues. The report includes an analysis of the effectiveness of labor regulation, compliance with labor laws, and the prevention of illegal employment. It also looks at certain aspects of professional development and issuing of permits, inter alia, to foreigners. This report is based on specific cases, legislative analysis and broad-ranging dialog with state agencies and business associations.

In Q4 2018, government agencies implemented several recommendations previously issued by the Council. The “Mask Show Stop 2” law expanded mechanisms for challenging abuse on the part of law enforcement agencies. As previously recommended by the BOC, the National Energy and Utilities Regulatory Commission approved fixed rates for getting hooked up to power grids, depending on power capacity declared by the customer. The State Architectural and Construction Inspection also followed the Council’s recommendation and introduced online tools that contain all documented information about construction in order to increase customer usability and eliminate risks of abuse by state agencies.

The full version of the quarterly report in Ukrainian and English is available here.