Agricultural enterprises cannot join the “white business club”: reasons
2 December 2024 12:14
Due to legislative restrictions, many agricultural enterprises in Ukraine cannot join the so-called “white business club,” an initiative that was supposed to be a symbol of a high level of tax confidence. Ukrainian MP Nina Yuzhanina reported on the relevant problems, pointing out the shortcomings of the selection criteria for membership, "Komersant Ukrainian" reports
According to Yuzhanina, one of the key conditions for joining the “club” is the absence of changes in the main type of economic activity (KVED) over the past 12 months. However, this requirement has become an insurmountable obstacle for many agricultural enterprises.
“For most agricultural enterprises, it is impossible to get into the club because they do not meet one of the requirements of the so-called membership, namely, no changes in the main type of economic activity over the past 12 consecutive calendar months,” the MP explained.
Why farmers changed their KVEDs
In early 2024, the government expanded the list of priority lending areas under the Affordable Loans 5-7-9% program. This list included only livestock farming, which allowed agricultural enterprises to receive loans of up to UAH 150 million. In response, many farms that were engaged in both crop and livestock production changed their main activity to livestock farming.
“Many agricultural enterprises engaged in both crop and livestock farming have changed their main economic activity to livestock farming. And now they can’t get into the club and are asking for appropriate changes to the law,” Yuzhanina said.
Are there any chances of changing the rules?
Representatives of the agricultural sector, including the Dnipropetrovs’k Regional Organization of Agricultural Employers, have asked the Verkhovna Rada Tax Committee to review the requirements for membership in the “white business club.” However, Nina Yuzhanina expressed skepticism about the likelihood of changes.
“However, it is unlikely that the Tax Committee will hear this appeal of the Dnipropetrovs’k Regional Organization of Agricultural Employers. It is not so easy to get into the “Territory of High Level of Tax Confidence”,” the MP summarized.
What is known about the “White Business Club”
As a reminder, the President of Ukraine Volodymyr Zelenskyy signed the draft law No. 11084 on the creation of the “White Business Club” – a list of taxpayers with a high level of voluntary compliance with tax legislation.
The law is aimed at improving the interaction between tax authorities and honest taxpayers, providing the latter with certain benefits in exchange for a high level of tax discipline.
It clarifies the concept of “tax risk” and introduces a new concept of “compliance” (tax risk management).
The Law defines the criteria for recognizing a taxpayer as a bona fide taxpayer, including no or minimal tax debt, timely submission of reports, compliance with industry tax payment rates, and payment of salaries not lower than the industry average.
Taxpayers included in the list will receive the following benefits:
- upon request, the taxpayer has the right to receive information about tax information available to the controlling authority that may indicate tax risks in the taxpayer’s activities, as well as advice on how to eliminate such risks within five days
- moratorium on documentary audits;
- reduction of the timeframe for desk and documentary audits for the purposes of budgetary reimbursement – five calendar days;
- individual tax consultations within five calendar days;
- the taxpayer is assigned a compliance manager with whom the taxpayer will be able to interact, in particular by means of remote communication, including videoconferencing;
The list of bona fide taxpayers is compiled on a quarterly basis, and taxpayers are notified of their inclusion in this list. These features will be in effect for the period of martial law and until the end of the year, when it will be canceled.
Read about the business reaction to the law here.
