The Rada passed a law on the White Business Club with benefits for its members. The reaction of social media is strong
19 June 2024 09:36
On 18 June 2024, the Verkhovna Rada of Ukraine passed a law establishing the White Business Club, a list of taxpayers with a high level of voluntary compliance with tax laws. The relevant bill No. 11084 was voted for by 263 MPs, reports [кomersant].
According to the law, the “White Business Club” will include legal entities and individual entrepreneurs, residents of Diia.City, who meet a number of criteria. The requirements include timely and full payment of all taxes, compliance with the proper level of payroll, etc. The criteria will vary depending on the company’s taxation system.
Companies included in the White Business Club list will receive a number of preferences. In particular, they will be subject to a moratorium on most types of documentary inspections (except for some). In addition, the timeframe for in-house and documentary audits required for VAT refunds will be reduced for these companies. Club members will also be entitled to priority individual tax consultations within 5 calendar days.
To ensure prompt interaction with the tax authorities, each bona fide taxpayer will be assigned a compliance manager who can communicate with them, in particular, via video conferencing.
The State Tax Service will maintain the list of the White Business Club and publish it on its website, along with the criteria for inclusion. Businesses will be notified of their inclusion in the list via the Electronic Cabinet.
The law is expected to facilitate partnerships between businesses and regulatory authorities and ensure social justice in tax matters.
Amendment on reservation of 25% of employees
One of the most controversial provisions of the document is an amendment by the Chairman of the Verkhovna Rada’s Finance Committee, Danylo Hetmantsev, which provides for an additional 25% reservation from mobilisation for “club members”. At first, MP Yaroslav Zheleznyak said that the amendment was rejected, but later it turned out that it had been taken into account in the draft law.
The amendment recommends that the Cabinet of Ministers of Ukraine amend the procedure for reserving persons liable for military service from conscription. According to the amendment, companies that join the White Business Club should be given the opportunity to automatically reserve a portion of their employees who are liable for military service. This share should not exceed 25% of the total number of such employees.
Hetmantsev stressed that this amendment only recommends that the government consider such an initiative, but does not mean that it is mandatory to introduce reservations for the “club members”.
“We gave the government a pass and are waiting for a response,”
– the MP explained in a comment to Forbes.
Hetmantsev also stressed that the possible booking of employees of the White Business Club will not replace or affect the overall system of economic booking in the country. This is just an additional option of preferences for honest taxpayers, not the main mechanism. There are currently three other separate draft laws on economic booking being considered by the Verkhovna Rada, and the adopted amendment does not affect their content in any way.
Reaction
Business representatives and active online users have already criticised the document.
PR strategist Serhiy Didkovskiy believes that the White Business Club officially establishes the presumption of taxpayer guilt.
Blogger and politician Anton Shvets also notes that all businesses that are not members of the club will now be officially considered not quite white.
“Welcome to the Black Business Club! After all, if you are not yet in the Getmantsev White Business Club, then you are not really a white business. And whether you will be in the club will be decided by the tax authorities… the law… literally at the legislative level, it enshrines the ability of the tax authorities to manually decide whether your business is white or coloured. If you remember how many problems businesses have with blocking tax invoices, which happens only at the level of a resolution, you can only imagine how much heartburn this law will cause us all,”
– the blogger wrote.
He also noted that the draft law only added to the tax authorities’ ability to decide everything about business at their own discretion, so it is definitely corruption-prone:
“between the first and second readings, the law increased to 11 the number of criteria that put you in the economic ghetto of coloured businessmen. But this is still not enough, so just in case, for the sake of simplicity and fairness, the law added to the 11 criteria the provision that “additional criteria may be developed by the supervisory authority”. Ahaha, thank you, they have simplified and streamlined it, my respect. The controlling authority, in case anyone hasn’t understood, is the Tax Service. It is an extremely honest tax office, extremely fair to determine the colour of your business, and if it does not have enough arguments, it can come up with new ones.”
Commentators point out that the White Business Club essentially requires entrepreneurs to take additional actions (and costs) to obtain the rights they already have from the state.
The law was passed in the second reading. It will now go to the president for his signature, who may veto it. In this case, MPs can override the veto with 300 votes in favour.
