Ukraine calls off tax police, seeks foreign investment
KIEV:
Ukrainian President Petro Poroshenko yesterday tried to bring in foreign investment and slash corruption by temporarily banning the tax police from conducting unannounced checks on companies’ operations. The measure is also supposed to let small businesses thrive by letting them stay open without any inspections for three years.
The former Soviet republic is keen to shed the label of Europe’s most graft-ridden state that was stamped on it by the European Court of Auditors last month. Ukraine’s tax police and other inspection authorities are notorious for accepting bribes as a reward for letting companies stay in business after committing minor-or even made-upviolations.
An improvement in the cashstrapped and war-torn country’s business climate has been a constant demand wrapped into a $17.5-billion (16.6-billion-euro) rescue package approved by the International Monetary Fund last year. Poroshenko has vowed to fight corruption by cracking down on the power wielded by a handful of oligarchs and opening up officials’ incomes for viewing to all Ukrainians curious about their elected leaders’ possibly illgotten gains.
‘Controlling authorities’
The second measure is already in effect while the battle to reign in the billionaires is taking more time. The law adopted yesterday moves one step further by putting tough curbs on the powers of the tax police. “This will substantially reduce the number of inspections by the controlling authorities,” the pro-Western leader said in a statement. “We are going to see a qualitative change in the investment and tax climate.”
The world bank ranks Ukraine 80th on its 2016 Ease of Doing Business index. That is 40 spots worse than its arch-rival Russia-a country where the Kremlin dominates business and the courts are viewed as bought off-and only one grade better than its 2015 ranking. Ukraine faired especially poorly in categories such as taxation and handing out construction and business permits.
Poroshenko said the tax authorities will no longer be investigative but rather “consultative” in nature. That means companies will be able to turn to them with questions but no longer have to open up their books during spot inspections. Economists have said that such sudden checks have long been used by businessmen to close the operations of a rival on a technicality.
The tax police have also been reported to conduct raids on companies that fall out of favor with a particular tycoon or politician with business ties. The law says that unannounced tax inspections may resume anew at the start of 2018. — AFP