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Where there is no law, but every man does what is right in his own eyes, there is the least of real liberty
Henry M. Robert

PARLIAMENT AXES PRESIDENTIAL DECREE ON VAT

13 November, 2012 - 00:00

On May 3, the Ukrainian Parliament rejected a presidential bill on changes and amendments to the VAT law. In line with the Ukrainian Constitution, the rejection of the bill automatically invalidates another presidential decree of May 7 on other VAT payments. According to lawmaker Serhiy Teriokhin, from the legal point of view, the presidential decree contradicts the Constitution and laws of Ukraine.

As defined by law, the VAT is a tax on consumption which is levied on and registered by sellers of goods at each stage of their sales and which is paid by the end consumer. The presidential decree changes the economic content of VAT by placing the tax burden on producers. The presidential decree is actually aimed at taking away part of corporate cash flow rightly owned by companies.

Mr. Teriokhin said there is little sense in introducing monthly accounting and tax payments for small companies with low sales levels. In addition, the presidential decree would considerably increase corporate expenses for monthly accounting and VAT payments. If banks are authorized to collect taxes, as the presidential decree suggests, this would cause large-scale corruption and increase the number of businesses operating illegally.

The presidential decree proposed introducing a uniform tax period (one month) by January 1, 1999 for all VAT payers, regardless of their sales volume, as well as advance VAT payments (three times a month). The President also proposed canceling monthly VAT repayment from the budget to VAT payers having a negative VAT balance. Instead, the decree proposed VAT repayment every three months.

 

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