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The number of complaints from business goes up in Q1 2020 

19.05.2020

The first quarter of 2020, despite the decline in business activity due to introduction of quarantine in the mid-March, was marked by an increase in the number of complaints from entrepreneurs. We received 462 appeals on malpractice of state bodies (which is 12% more than in Q4 2019) and closed 295 cases (18% more as compared to Q4 2019). Entrepreneurs turned to us with new challenges related to lockdown impact on business: ban on medical products re-export, refusal to register a taxpayer, ungrounded orders on closing shops and conducting classes online. 

‘This quarter, we helped companies to recover and save UAH 231 mn. Apart from it, we seized dozens of episodes of civil servants’ malpractice, assisted in enforcing court decisions, closing unreasonable criminal cases, obtaining permits and licenses. Among complainants, who responded to our request for feedback, 99% were satisfied with working with us’, stressed the Business Ombudsman, Marcin Święcicki

In Q1 2020, 84% of total appeals concerned following blocks of complaints:

Tax issues (58%). The number of appeals on tax issues increased as compared to Q4 2019 and Q1 2019. It was driven by a rise in the number of key matters of complaints: tax inspections, tax criminal cases and tax invoices suspension. In the latter subject, the biggest groups of appeals were: inclusion into lists of high-risk taxpayers (44%) and non-enforcement of court decisions on tax invoices registration (38%), while the common complaints on tax invoices suspension made up only 18%. 

Actions of law enforcement bodies (11%). Companies complained more against the National Police, in particular, reporting more episodes of the procedural abuse; on the contrary, the number of appeals on its inactivity went down. At the same time, the Council received less complaints concerning the Prosecutor’s Office and the State Security Service of Ukraine as compared to Q4 2019 and Q1 2019.

Actions of local government authorities (LGAs) (7%). In the reporting period, the Council received 33 appeals against LGAs – it is almost four times more than in Q4 2019 and twice more than in Q1 2019.

Actions of state regulators (4%). The number of complaints against actions of state regulators decreased by about one third in comparison with Q4 2019 and Q1 2019. As compared to the previous quarter, businesses complained less about the actions of DABI and the AMCU, while the number of complaints about the actions of the State GeoCadastre went up.

Customs issues (4%). This subject of appeals was on a rise in the reporting quarter. We received 18 appeals that is 8 cases more as compared to Q4 2019. This was due to the increase in the number of complaints related to disputes in customs valuation of goods and delays in customs clearance. 

The Council noted some systemic achievements of the quarter based on its recommendations previously issued to government agencies:
•   the law on the deshadowing of the metallurgical raw materials market and scrap metal operations was adopted in the first reading;
•   a draft legal act approving the technical regulation of building materials in full compliance with EU Commission Regulation was prepared;
•  a mechanism to provide information to companies included in high-risk taxpayers list on how to be excluded from there was introduced. A recent CMU resolution stipulte such a reasoning, but we will continue monitoring its practical implementation;
•   the obligation of businesses to inform the tax authority about a newly appointed CEO was cancelled;
•  amounts of fines for employers were reviewed, taking into account the severity and the employer’s degree of guilt, as well as the possibility of applying warnings for minor offenses;
•   technical regulations on conformity assessment and acceptance of industrial products were aligned with the EU Association Agreement. 

Based on over 7000 investigated complaints, the BOC has prepared two brochures with practical recommendations for businesses:

1.    "How to Correctly Report on Corruption Among State Officials” 
Realizing that entrepreneurs who faced corruption are often not ready to speak publicly about it, the BOC described government guaranties introduced for whistleblowers and compiled information on confidential communications channels. 

2.    "How to Protect Your Business and Real Estate from Raidership" 
The BOC has developed recommendations on how to protect against illegal forfeiture of assets and what to do in case of a raider attack. 

A full version of the quarterly report in English is available here.