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giggster — 11.11.2010 [email protected]
[email protected]

To Whom It May Concern

I am a private businessman engaged in publishing and online book trade in Ukraine.

As you are aware, this year Ukraine entered into a Stand-By Arrangement (SBA) with the International Monetary Fund. The mission of the IMF headed by Mr Thanos Arvanitis is currently here and is described as quite successful in its talks with the Ukrainian Government.

Understandingly, we are not informed by the Government of all the requirements imposed on Ukraine under the SBA. However, the government officials continuously report in the press that all the legislative novelties, in particular, the Tax Code under discussion in the Ukrainian Parliament, directly result from or is imposed on by the IMF requirements.

I have to say that the draft Tax Code is generally regarded by the Ukrainian small-business community as draconian and aimed at eliminating the small business in the country. This very realization has already caused numerous protests all over the country. More protests are planned for November 16 when the Parliament is to approve the Code.

It is common knowledge that the small businesses make the backbone of any civilized economy. It generates self-employed people who do not depend on the state support and do not seek one.

Small businesses are still thin on the Ukrainian ground. Such a fragile community would require specific attitude in good times. At times of an economic crisis with its shrinking activities, lesser demand and higher prices, the need to help small businesses is crucial as it is small businesses that make countries all over the world successfully recover of the economic calamity. According to SME and Entrepreneurship Outlook, OECD, 2005, in OECD countries, SMEs represent 95% of all enterprises, accounting for two-thirds of employment and being the main source of new job creation. As such, SMEs in many countries around the world are the major source of economic recovery and assist the return to sustainable growth.

It is then surprising the the IMF seems (or is so reported) to approve all the economic moves of the Ukrainian Government with respect to small businesses. It is even more surprising to realize that the IMF seems (or is so reported) to press the Government to complicate the terms of business in the economy which is still far from being an embodiment of liberal approaches.

Among its provisions, the mentioned draft Code narrows the applicability of a so-called Simplified Procedure of Accounting and Reporting (SPAR) introduced in 1999 to foster small business development that gave millions of Ukrainians a chance to switch from the state employment to self-employment.

The Code complicates the reporting, lowers by half the threshold for a small business to operate under the SPAR, gives more powers to tax inspections, raises the tax rate thrice the current amount, introduces new payments to the pension fund, etc.

It is not just feasible to list here all the new taxation provisions the Code introduces and the IMF seems (or is so reported) to approve of.

Unfortunately, I do not represent any small business association, but I believe that the IMF mission should not just meet the government officials but listen to those who in their everyday activity try and make Ukraine a prospering, modern and sustainable economy.

Best regards,

Oleksandr Voroshylo

successfully sent to all the above addresses Nov. 11, 2010, 12:43

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