The Ukrainian Restaurant Association welcomes bill No. 5590 on amendments to the Tax Code to reduce the value added tax rate for the restaurant industry and catering services from 20% to 7%.
According to the association, about 63% of the restaurateurs surveyed by it expect business development due to the VAT reduction, and 19% of respondents intend to reorganize into an LLC if such an amendment to the code is adopted.
“Catering establishments often use the individual entrepreneur system for selling food and the LLC system for selling alcohol. This creates a number of difficulties for the restaurateurs themselves – the impossibility of maintaining civilized transparent relations with banks in terms of obtaining loans, limiting cashless payments with retail chains, the complexity of administering the tax payment process,” President of the Ukrainian Restaurant Association Serhiy Trakhachev said.
“Today there is a huge demand from the industry itself for the transition to a civilized and transparent form of existence. But this request is limited by a significant tax burden, in particular the need to pay VAT at the standard level of 20%,” he said.
So, the adoption of the amendments will allow increasing working capital in the restaurant sector and save jobs. According to the association, due to the coronavirus pandemic and quarantine restrictions, the volume of the restaurant market in Ukraine in 2020 decreased by a third and amounted to UAH 14.1 billion, almost all market players reduced their revenue.