Ukraine caught up to Estonia in transparency

In January 2020 The Association of Agrarians of Ukraine supported the President of Ukraine Volodymyr Zelensky in his efforts to attract foreign investors to Ukraine and creation of transparency and fair conditions in business environment as a prerequisite of Ukraine’s prosperity (you can find an overview of the Estonian experience on the Association’s website AAU supports Zelensky and proposes to introduce transparent tax bills for businesses).

 

Now the initiative to strengthen the process of de-shadowing the economy came from the Ministry of Digital Transformation and the State Tax Service. The website of “Economic Truth” published a copy of speech of Minister Mikhail Fedorov: «For a long time, businesses in Ukraine did not have legal access to financial statements. As a result, entrepreneurs did not have the opportunity to make informed decisions about cooperation with partners, and foreign companies could not assess the real situation on the Ukrainian market”.

 

The main essence of the innovations is that the State Tax Service has published information on income, losses, assets and funds on the balance at the Unified Open Data Portal and on its website. It should be noted that before these changes, such information was classified, except for private joint-stock companies – their reports were available as and they were required to publish it regularly.

 

It is important to emphasize that any secrecy provides an opportunity for financial manipulation, in particular for tax evasion, and not only for legal entities but also for individuals who cooperate with business. In addition, the “aura of secrecy” allows hiding the sources of income. All this creates an unfavorable “soil” for attracting investment – foreign investors are cautiously looking at the prospect of investing funds in Ukraine, and this is a serious regression in the development of the economy. Thus, the outflow of foreign direct investment in Ukraine in 2020 amounted to $ 868 million (according to the National Bank of Ukraine).

 

“Of course, we can say that the unprecedented outflow of foreign investment from the country is caused by a pandemic, but a pandemic is a global problem that has affected absolutely everyone, so it would be wrong to refer only to it. The members of our Association are unanimous that the main problem of Ukraine is precisely the “shadow economy”. We support the Minister of Digital Transformation Mikhail Fedorov in the opinion that the openness and availability of information on the income and expenses of companies and private entrepreneurs will give an impetus to the development of partnerships between Ukrainian and foreign business. AAU members do business honestly аnd recommend doing so to everyone. Equal conditions for all market participants will create healthy competition.” – noted the Chairman of the AAU Oleksandr Vasilivsky.