Business news from Ukraine

BAN ON REGISTRATION IN UKRAINE OF SALVAGED CARS FROM ABROAD TO ENTAIL $327 MLN BUDGET LOSSES/YEAR –COMPANY

Changes to the registration of vehicles, initiated by the Interior Ministry of Ukraine, which, in particular, prohibit the registration of cars with salvage titles imported from abroad, will create problems for companies involved in this business, will make it impossible for Ukrainians to buy such cars with a clear history at reasonable prices and also entail losses of the national budget in the amount of at least $327 million, according to Columb Trade company.
“Now more than 90% of cars with salvage titles come to Ukraine with such documents (marked for recycling), but in fact they have minor damage (lighting, bumpers, wings) and after restoration pass certification in authorized bodies. The proposed changes may replace the functionality of certification bodies, while citizens are deprived of the opportunity to purchase a car with a clear history of origin,” Roman Voloshin, a lawyer of the company, said at a press conference at Interfax-Ukraine.
He emphasized that in general the draft resolution, posted on the website of the Interior Ministry for discussion, contains many positive norms that will simplify the process of registration (re-registration of a car), however, two provisions on the prohibition of registration of cars with salvage titles, as well as on the need for mandatory translation of accompanying documents to the official language with an apostille will create chaos in the market, will entail additional costs for buyers and budget losses.
“Only the requirement of compulsory apostille, according to our calculations, will lead to additional costs for buyers of $200-300,” Voloshin said.
According to the calculations cited by Columb Trade co-founder Volodymyr Kovel, about 36,800 people who want to buy a car from abroad can suffer from such innovations (registration ban).
“The transit of a car from the United States takes three months, and the average monthly supply is 10,000 cars. Now 30,000 cars are in transit. Even minor repairs, taking into account certification and registration, take about a month. Respectively, there will be 40,000 such cars, not yet registered, of which 92% with the status of to be recycled, that is, 36,800 cars,” Kovel said.
He considers it incorrect to take into account the status of recycling, which the United States accept for itself, since there it is done by the method of financial accounting of the residual value of a car, while the damage can be minor and in Ukraine they can be repaired for $2,500-3,000.
Kovel stressed that these restrictions will not force Ukrainians to refuse buying cars from abroad, and they will be forced to buy the same cars from the United States, for example, in Georgia or Latvia, where this business has long been established, but then they will serve the orders of Ukrainians and get receipts from customs clearance and other fees going to the budget of their countries. As a result, the car will cost a Ukrainian almost $3,000 more, taking into account the extension of the logistics chain, the need to bring cars from neighboring countries and other expenses.

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THANKS TO FIGHT WITH SHADOW SCHEMES NATIONAL UKRAINIAN BUDGET GETS EXTRA UAH 1 BLN

The change of approaches in the work of tax officers has shown a tangible result for the replenishment of Ukraine’s national budget, Finance Minister Serhiy Marchenko said during a Thursday press conference devoted to the current financial and economic situation and the state of the implementation of the budget.
In particular, in June 2020, the general fund of the national budget received UAH 112.9 billion, and the target was met by 105.5%. Additional receipts totaled UAH 5.8 billion.
In general, the June performance of the State Tax Service amounted to 107.7%, which is UAH 6.4 billion more than the monthly plan. At the same time, UAH 11.6 billion of VAT was reimbursed.
“Overperformance of the tax plan is the result of the fight against shadow schemes and tax evasion in the State Tax Service. This is an indicator of stopping schemes for paying [minimized] VAT and fictitious tax sparing credits. Such criminal phenomena are a thing of the past. Positive trends are indicated by the amount of VAT accrual (according to the May declaration), which is UAH 19.5 billion. This is almost UAH 1 billion higher than the corresponding figure of last year with a decrease in supply by 20%. In general, the tax efficiency for VAT today is 3.4%, and this is a record for one year and a half,” Marchenko said.
According to the finance minister, it was possible to stop the leakage of funds from the tax service due to increased transparency and accountability of the tax authorities, staff rotation, improved organizational structure of the STS, and improved quality of services provided to taxpayers.”The tax authorities themselves have changed their approach to work. Today, the focus is on the analytical component: adhering to a risk-based approach allows us to stay ahead, and not with consequences,” the finance minister said.

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KYIV BUDGET LOSSES ABOUT UAH 1.5 BLN DUE TO PANDEMIC – MAYOR

Kyiv budget losses already reach about UAH 1.5 billion because of pandemic of coronavirus (COVID-19) disease, Mayor of Kyiv Vitali Klitschko said.
“Well, today it is difficult for everyone. We live in completely different realities during two months. Some lost their jobs, some went on leave without pay, some began to earn much less. The city is also losing money. According to our estimates, the losses of the city budget reach about UAH 1.5 billion due to the pandemic,” Klitschko said at an online briefing on Wednesday, May 13.
“If the situation worsens, the capital will decide on additional budget adjustments. After all, we practically do not receive taxes and fees that came to the city from small and medium-sized businesses. However, we understand how difficult it is for business and what it needs to be supported. So, we do everything, what we can do in this situation,” the mayor said.
Klitschko said that the city provided a 50% discount for small and medium-sized businesses to pay for the rental of communal property. If it is impossible to use the facility, for a period of restrictions as well, tenants of communal property were exempted from payment under lease agreements. Moreover, from March 1 to April 30, individual entrepreneurs were exempted from paying a single social security tax.
“With understanding the fact, that the business has losses and it needs help, we prepared a decision of Kyiv City Council on the introduction of symbolic fixed payment of shares in the amount of UAH 1 for summer and seasonal areas of cafes and restaurants. Namely, before the end of October for summer areas, and before the end of December for seasonal ones,” the mayor said.
In addition, the summer and seasonal areas that received documents in 2019, the Department of Urban Planning and Architecture of Kyiv City State Administration will issue new documents for placement without processing and unnecessary approvals, for a period of two working days. Such procedure will concern new areas that want to work in compliance with all requirements.
“I would like to remind that the city authorities resumed cooperation with the Entrepreneurship Development Fund, the former German-Ukrainian Fund. Entrepreneurs of the capital will be able to get financing from the fund for the implementation of investment projects. The city also provided funds in the budget for financial and credit support of the business. It is more than UAH 7 million. Due to these funds, Kyiv entrepreneurs will get the compensation of 50% of the interest rate on loan agreements with the fund. We understand that small and medium-sized businesses are the basis of the city’s economy, and it must be supported and encouraged. It will be difficult for everyone, but I am convinced that by joint efforts and constructive cooperation we will overcome this challenge,” Klitschko said.

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1,000 CLINICS IN UKRAINE INCREASE FINANCING FROM CENTRAL BUDGET

Around 1,000 clinics have increased financing from the central bank under phase two of the healthcare reform, acting Head of the National Health Service of Ukraine Oksana Movchan has said. “About 1,000 medical institutions received more money from the central budget under contracts with the National Health Service, some of them by 70%, some by 5%, some by 50%,” she said in an interview with Interfax-Ukraine.
She said that medical institutions have two sources of financing – the central budget and the local one.
“The National Health Service manages the money of the central budget. Previously, it was a healthcare subvention, but now it is a healthcare guarantee program. In 2020, more money was allocated from the central budget for the healthcare guarantee program,” she said.
At the same time, according to her, about 600 medical institutions for various reasons received less money from the central budget.

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NBU TRANSFERS ALL PROFIT TO STATE BUDGET

The National Bank of Ukraine (NBU) on April 1 transferred all the planned UAH 42.7 billion in profit for 2019 to the national budget, according to the regulator’s Facebook page.
“This year, in agreement with the Ministry of Finance, it was decided to transfer the entire amount of the National Bank’s profit to the state budget,” the report says.
It is clarified that in this way the regulator helps the government in overcoming the epidemic in the country.
As reported, state budget revenues in March 2020 amounted to UAH 87.8 billion, which is 10.4% less than the plan and 2.6% more than in March 2019. In addition, the general fund of the state budget received UAH 78.4 billion, which is 10.3% less than the planned figure.

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UKRAINE’S STATE BUDGET DEFICIT FOR 2019 COMES TO UAH 78 BLN

The deficit of Ukraine’s state budget for 2019 was UAH 78.05 billion with the ceiling set in the national budget being UAH 91.13 billion, while in 2018 the deficit of the national budget was UAH 59.25 billion with the ceiling of UAH 94.1 billion. According to the updated information posted by the State Treasury Service of Ukraine on its website, the deficit of the general fund was UAH 68.85 billion with the ceiling being UAH 69.62 billion.
In the early days of this year, the Ministry of Finance, citing recent data from the State Treasury Service, reported on the deficit of the national budget last year in the amount of UAH 72.4 billion, or 1.8% of GDP.
The 2019 state budget deficit was almost entirely funded by borrowings, as revenues from privatization amounted to only UAH 550 million, i.e. 3.2% of the initial budget assignment.
In accordance with the updated data of the State Treasury Service, the national budget receipts for 2019 increased 7.6%, to UAH 998.28 billion, including growth of 5.5% for the general fund, to UAH 879.83 billion.
Compared with the indicators laid down in the law on the national budget, the receipts target was met by 99.1%, including 96.9% for the general fund.
Last year, national budget expenditures amounted to UAH 1.073 trillion, which is 8.7% more than the expenses of the national budget 2018, including growth of 8.4% for the general fund, to UAH 952.98 billion.
Compared with the indicators laid down in the law on the national budget, the expenditure target was met by 98.2%, including 96.9% for the general fund.
The national budget of Ukraine for 2020 was approved with receipts of UAH 1.095 trillion, including UAH 975.17 billion for the general fund, and expenditure of UAH 1.182 trillion, including UAH 1.052 trillion for the general fund. The ceiling for the deficit is set at UAH 94.3 billion, or 2.09% of forecast GDP.

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