New tax code to bring $2.5 bln out of shadow economy, Homutynnyk says

New tax code to bring $2.5 bln out of shadow economy, Homutynnyk says

The main goal of the new tax code is to create favorable conditions for the growth of any business, he says.
“On the one hand, we are cutting taxes. On the other hand, we will try to bring shadow cash flow back into the open. At present, 40% of Ukraine businesses operate in the shadow. It will earn the budget UAH 270-300 bln, but it’s a difficult task, the lawmaker admitted to The Delo.
As regards the big business, the code restricts the export of royalties. It also stops deliberate underestimation of gross costs. If the law is enforced properly, we will do away with illegal schemes of cheating the state, Homutynnyk said

35% of Ukrainian economy is in shadow / News / NRCU

35% of Ukrainian economy is in shadow / News / NRCU

ccording to the Ministry of Economy, the share of shadow economy last year grew by 1 percentage point to 35% of official GDP. In absolute terms, this means that the volume of unreported GDP, generated in the informal sector in 2009, amounted to almost 320 billion UAH (1 USD - 7.92 UAH), newspaper Delo reported.

"The significant increase in the informal sector was observed in the 4th quarter of 2008 and 1st quarter of 2009. During this period, the shadowing grew by almost 10 percentage points to a maximum of 39%," a statement of the Ministry of Economy reads. And the fact that during the last three quarters of 2009, the share of shadow economy declined by 4 points to 35% owes to the fact that the business adapted to work in crisis conditions, as well as to stabilization of the situation on the foreign exchange market and in the banking sector.

Kyiv Post. Independence. Community. Trust - Ukraine - Medvedko calls for renewed fight against shadow economy

Kyiv Post. Independence. Community. Trust - Ukraine - Medvedko calls for renewed fight against shadow economy

Measures to combat the shadow economy should be drawn up by the police, tax and customs services, according to Ukrainian Prosecutor General Oleksandr Medvedko.

"The leadership of the Interior Ministry, SBU and tax administration should draft additional measures to fight the shadow economy, and this would be a good guarantee of bringing order," he said on Friday, speaking at a coordination meeting of heads of law-enforcement bodies with participation of Ukrainian president Viktor Yanukovych.

He said that measures to fight corruption should be taken by SBU and the Interior Ministry.

Shadow economy growth during crisis

According to the ministry of economy of Ukraine, the sharp collapse of the GDP in Ukraine can be partially explained by the relative expansion of the shadow economy. The shadow economy grew by 2.3% in 2008 according to the integral index of shadow economy. Actually it is an average of estimates calculate by three different methods: based on money demand, based on retail sales, and based on the share of unprofitable enterprises. The first two methods reported considerable increase of the shadow economy to 38% (by 12% according to the money demand based method), while the third method gives more conservative estimates of 29%.

The next picture demonstrate the differences in the size of the shadow economy in different industrial sectors in 2008 computed by the share of unprofitable enterprises method:

This figure actually cast some doubts on the method because it really surprising that the share of shadow activities in construction is lower than in the extraction of raw materials.

Shadow economy legalized in Ukraine

Judging by the indicators of the second quarter, “the country begins gradually recovering,” ex-minister of finance Viktor Pynzenyk said in a TV Channel 5 interview, adding “Ukraine is in 2003 now - it was pushed five years back."

Beside that, he emphasized, Ukraine has a “legal shadow economy.” “We have a legalized shadow economy - the economy allowed not to pay taxes by different parliamentary decisions through special taxation mechanisms,” the ex-minister noted. At the same time, he says that the indexes of decline in the fourth quarter will be much lower than in the first and second.