Kiseliova believes that due to a possible tax increase for sole proprietors, Mykolaiv may lose business: «There will be a very large outflow»

Mykolaiv City Council Deputy Olena Kiselova, photo by "NikVesti"

Mykolaiv City Council deputy Olena Kiseliova believes that the increased tax burden planned by the central government will lead to an outflow of businesses from Mykolaiv.

She said this on the Mart TV channel.

Olena Kiseliova emphasised that the first and second groups of sole proprietors are mainly entrepreneurs who provide basic services to the population.

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«The first and second groups are, let's say, individual entrepreneurs who provide services to citizens. That is, hairdressers, tyre repairers, market traders, and small shop owners. These are the most primitive — in the best sense of the word — forms of entrepreneurial activity. And they were given that single tax,» said the deputy.

She noted that the mechanisms proposed by the central government primarily affect legal small businesses.

«For example, hairdressers or tutors, or family doctors, who, incidentally, are also sole proprietors today. They will become VAT payers, for example. They will have to have an accountant, keep tax records, and have a special account for VAT payments. In other words, people who are not familiar with this will not be able to work with it and will not want to, because it completely negates the single tax system, which is not just a tax, but is called a «simplified business system,» said Olena Kiselova.

The MP also pointed out that Ukrainians who are abroad but continue to pay taxes to their communities remain sole proprietors.

«There are IT specialists who, even though they are outside Ukraine today, are essentially financing their local communities. Because if a person is registered in a particular local community, they pay a single tax to themselves. And so, for example, this person is somewhere in Poland. They work, and the money goes here to Mykolaiv. Here they tell them, «That's it, enough, bye-bye.» They say, «That's it, Dіia. I'm closing my business, you can figure it out on your own.» So there will be a very large outflow.

I hope that this bill, in its current form, will be withdrawn. It must be withdrawn and revised. I hope that other mechanisms and methods will be found to fill the state budget without affecting those who are already struggling, to put it mildly,» she explained.

As is known, deputies of the Mykolaiv City Council appealed to President Volodymyr Zelenskyy, the Verkhovna Rada and the Cabinet of Ministers with a request not to increase the tax burden on local entrepreneurs.

On 27 November, it became known that Ukraine had agreed to new requirements from the International Monetary Fund, which, in particular, provide for the abolition of some tax breaks. This is a condition for receiving the next IMF loan tranche.

In particular, it is planned to introduce an additional tax burden for individual entrepreneurs with an annual income of more than one million hryvnias — they will be required to pay value added tax.

This information was later officially confirmed by the IMF, which emphasised that Ukraine's compliance with the Fund's requirements is a necessary condition for the provision of an $8 billion loan.

In turn, the head of the parliamentary committee on finance, tax and customs policy, Danylo Hetmantsev, said that the introduction of value added tax for individual entrepreneurs was primarily the fault of "cunning" big business and insufficient work by tax authorities.

Recently, on 12 January, the Association of Ukrainian Cities appealed to the Cabinet of Ministers, the Verkhovna Rada and the President of Ukraine regarding the inadmissibility of introducing a mandatory value added tax for single tax payers.

The appeal emphasises that the introduction of VAT for the simplified taxation system could lead to the shadowing of business, job cuts and, as a result, a reduction in local budget revenues. The mayor of Mykolaiv, Oleksandr Senkevych, also took part in this process.

Read the NikVesti article: «How business in Mykolaiv operates in conditions of power outages».