The Cabinet is preparing a Declaration of income and expenses for all Ukrainians

The government intends to introduce control over the revenues and expenditures of all Ukrainians. The proposal is contained in the “Medium-term plan of priority actions of the government up to 2020” released by the Cabinet recently. Economists say that we are talking about the old idea of “zero Declaration”, available from 2016 for high-ranking officials. Now it wants to make it mandatory for all Ukrainians, with incomes (salaries, pensions, scholarships, fees, profit from business, dividends, etc.) to monitor their compliance costs. According to experts, the main objective of innovations — unshadowing of the economy and the completion of the budget, but there are doubts that it can be implemented quickly and inexpensively.

WHAT’S ON OFFER. As we explained in the press service of the Cabinet, in 2017 it is planned to develop a draft law on universal Declaration for individuals and tax control with the use of indirect methods for matching revenues with expenses. After the law needs to be implemented an automated monitoring system (e-system) “income-expenses” and the tax will have the right to use indirect control methods (access to Bank accounts, interviewing neighbors, etc.). “This is one of the tools of unshadowing of the economy and countering the erosion of the tax base,” — said the press service. The head of the Verkhovna Rada Committee on tax and customs policy Nina Southerner told us that introducing the idea of universal Declaration of income and expenses is necessary, but it must be voluntary. “The idea of a universal Declaration, I do not support, since existing rules on Declaration of income is sufficient. And the cost should be in control of the fiscal authorities. The vast majority of citizens no one-time costs exceeding UAH 50 thousand, are already taken into account by the tax authorities, therefore, to force the whole country to submit an annual Declaration is meaningless.”

AS WILL BE. If the law of the universal Declaration will become effective (tentatively in 2018), each adult citizen must be at the end of the year to submit Declaration in electronic form about their income and expenses. That is, the mass filing could start in 2019 by the end of 2018. Declaration check the SFS, and if the amount of expenses of the person for the year will exceed income, ask him to explain the origin of money. “It documented in the “zero” Declaration of income of the previous periods, the question will be, — told us the President Ukranalittsentra Alexander Ohrimenko. — If the declarant can not explain where he got the money to buy luxury goods, will collect the penalty for tax evasion in the amount of 10% of the withheld amount and also 19.5% (18% income, 1.5% military tax). While the bill has not been developed, so it is unclear what is the minimum amount of expenditure will be subject to Declaration. But Okhrimenko, economist Ivan Nikitchenko assume that 50 thousand UAH. That is, spending on the purchase of products to declare is not necessary. “This is logical, because we have limits on cash payments in UAH 50 thousand, all costs above this amount has already been monitored,” said Nikitchenko.

THE PROS AND CONS. Okhrimenko said that the universal Declaration would hit large salaries “in envelopes” — from 5 thousand or more. They will be disadvantageous to, as you still have to pay taxes and penalties when you purchase expensive goods and services — housing, cars, tours abroad. “This can be called the European norm. But if the business will pay the salary “white”, and it will reduce the amount paid ERUs,” — said Okhrimenko. But to introduce innovation must gradually: first for employees, then for the self-employed, then for the rest, to avoid the chaos. You also need technical support for applicants — for example, pensioners and the poor. And Nikitchenko sure that instead of declaring you can just reduce the limit of cash purchases, for example, up to 10 thousand UAH. And he adds: “But what expenses you will need to start declaring millions of people and to verify the data is even impossible to count”.