Turnover tax profitable for state rather than for business - expert
2013-08-05 09:13:36
The Revenues Ministry initiative to cut the VAT rate to 9% and to introduce the turnover tax will increase budget revenues, however it will not ease the tax burden for business.
Head of the financial consulting department of the Pro-Consulting Company Natalia Alvarez has commented to Ukrinform on the legislative initiative of the Revenues and Duties Ministry.
"The value added tax reform sets as its prerogative the interests of the state - filling of the budget, but in no way the interests of Ukrainian business. Formally, the VAT rate will reduce to 9%, but there will be no real reduction of the tax burden for companies," Alvarez said.
As the analyst explained, first, a list of activities with preferential tax treatment will reduce, or of those, exempt from its payment. Second, in addition to VAT, another tax will emerge, which business will pay irrespective of results of their economic activities.
For instance, agricultural producers, having privileges today, after adoption of the law will pay turnover tax alongside with others, but will be exempt form the VAT payment on condition of the transfer of a part of VAT privileges to the state budget (the companies should return 10% of positive margin to the state budget, which will remain following the current period).
"The Revenues Ministry proposes to divide VAT obligations, to which income generated by the companies is subject, into two parts: the value added tax and turnover tax. In other words, the companies should pay two taxes instead of one VAT," the expert explained.
According to the analyst, this entails additional mandatory tax burden for business, as well as increases the time and labor expenses of the companies, caused by the need to account and to declare two taxes instead of one.
"Therefore, actually all business in Ukraine will pay the turnover tax and the prevailing majority of companies will pay the turnover tax. This will make a considerable effect on the budget revenues amount and will be a guarantee of tax revenues," Alvarez summed up.