Country Rankings - Ukraine
Sep 06, 2016 Ukraine: friendlyIt's quite a feat on the tax front that war-torn Ukraine has a substantially better tax system than Brazil, according to Paying Taxes. But at 107th in the league table, it is an understatement to suggest that there is still ample room for improvement. But, unlike Brazil, Ukraine is at least making an attempt to remedy the problem. The launch of a public consultation on the state of the tax system, intended to supply the Government with ideas on how things can be improved, is the latest in a number of recent initiatives designed to ease the country's tax and regulatory burden. Other examples include the launch of a new customs management system earlier this month, the creation of an expert working group on tax reform in June, and the approval of draft tax administrative reforms in April, aimed at bringing about structural reform in the State Fiscal Service, in line with changes proposed by the International Monetary Fund. Ukraine may be pulling out all the stops to make its tax regime more friendly for investors. But it certainly doesn't lack for friends in the international community. Ukraine now has preferential access to the EU market thanks to the Deep and Comprehensive Free Trade Area signed in 2014, and a new free trade partner in the form of Canada after the two nations signed a free trade agreement in July that will eliminate the majority of tariffs on bilateral trade. It has also tapped into the technical know-how of United States customs officials, who have provided assistance to the Ukraine Government as it modernizes it customs regime. You get the sense that the Western powers are heavily invested in the future economic success of Ukraine. And encouragingly, ongoing efforts to improve the tax regime are a signal that the country is not only relying on the good will of others, but is helping itself as well as it attempts to secure more foreign investment. It is a shame, therefore, that tensions with Russia will continue to overshadow the economy, at least as long as Vladimir Putin sticks around.
Mar 22, 2016 Ukraine: tryingAnother country that feels like it's often in a state of flux is Ukraine, although sometimes this is for much more sinister reasons than the mere tweaking of tax policy. However, just how this unfortunate country will emerge from its tug-of-war between East and West, between Moscow and Brussels, is difficult to foresee at this stage. At the moment, the country has a western-facing Government that is trying to implement long-overdue economic reforms and which has long-term aspirations to become a member of the European Union. The conclusion of an Association Agreement with the EU, which includes the Deep and Comprehensive Free Trade Area, under which the country will align many of its regulations and standards with Europe, represents a major step towards Ukraine's modernization. A newly approved and comprehensive economic reform plan should also help Ukraine along this road. However, the path is likely to be a long and tricky one. For the seventh year in a row, Ukraine registered Europe's lowest levels of economic freedom in 2016, according to the Heritage Foundation, which also found that corruption is still widespread, and the rule of law patchy to say the least. With the conflict unresolved in the east of the country, economic uncertainty persists, and the economy plunged by 11 percent last year. What's more, the continuing dominance of inefficient state industries hinders private sector growth. These are hardly prime conditions to nurture an economic renaissance, although you can't knock the Government for trying. The key questions is: how long will Vladimir tolerate Ukraine's dalliance with the West? In more peaceful and less turbulent times, Kiev would certainly seem worth a visit. But maybe I'd go by train. Why? Well, aviation has lost its romance, hasn't it? Now it's just another means of mass transportation. Long gone are the days when you could drink and smoke yourself around the world in comfort aboard a De Havilland or a Dakota. Now they trap you in the airport terminal for three hours before take-off, and subject you to various interrogations and searches. Then they pack you into your Boeing (even the plane names are prosaic) or Airbus like proverbial sardines, and if you're lucky they'll feed you something in a plastic tray, with plastic cutlery. Usually this something is laden with salt and sugar, so no wonder little Timmy is having trouble settling in the seat behind you. I used to marvel at the fact that I was traveling seven miles above the earth at close to the speed of sound. Now I just pray I can sleep through the ordeal!
Jul 31, 2014 Ukraine: corruption reductionIt used to be known as the bread basket of the Soviet Union. Now Ukraine is more like the economic basket case of Europe. What's happening in the east of Ukraine right now is truly tragic. But leaving aside that ethnic conflict, the other tragedy is that things ought to have turned out so much better. When Ukraine gained independence from the Soviet Union, it was generating one-quarter of the USSR's agricultural output while its diversified industrial sector was one of the bloc's main workshops. But instead of building on this base, successive governments seem to have squandered Ukraine's economic potential to the point where it has probably gone backwards rather than forwards. A huge problem is that corruption is rife and pervades the public and private sector at all levels. Surviving as a business very much depends on who your friends are, and while some well-connected business people are able to avoid paying taxes entirely, others end up paying two or three times more than they need to, with the excess usually going into the pockets of poorly-paid tax officials. Fail to pay these almost obligatory bribes and expect a visit from the Tax Inquisition. And don't even bother going to court because the judiciary is just as bad, pressured as it is by the Government to arrive at the "right" decision in many cases. Corruption was the major reason given by European businesses for their reluctance to invest in Ukraine in a recent report by the US State Department and is probably the reason why FDI has been so dismally low in recent years compared with other emerging economies. Not that attempts haven't been made to modernize. Indeed, the country's flirtation with the EU was seen as a significant step in the right direction. However, the tug-of-war between East and West over Ukraine has probably been just as damaging for the country as its weak and self-interested governments. Surprisingly then, we award Ukraine an encomium this week, after Prime Minister Arseniy Yatsenyuk ordered a tax reform which has as one of its goals the reduction of corruption within the tax service. Although it has to be said that his motives for doing so aren't exactly driven by a sense of idealism. What he is trying to achieve is to ensure that more tax revenue actually reaches the Government's coffers so it can afford to fight the Russian-backed rebels in the east. Shame though that it has taken such a crisis for action like this to be taken.
Oct 31, 2013 Ukraine: hmmm, maybeRussia acknowledges the Ukraine as its progenitor, racially and culturally, and the 20 years since the break-up of the Soviet Empire have seen a tussle between the Russo-centric (let's call them oligarchic) tendencies of the Ukraine and its Western European leanings. Although the current President is clearly on the wrong side of that debate, and of history, the country as a whole has seemed to swing towards Europe in the last few years. It's still a delicate balance: in the 1990s Ukraine was a byword for corruption, and reformers were routinely assassinated; even now, reformist ex-prime Minister Julia Timoshenko, perhaps no angel herself, languishes in a Ukrainian gaol. But the country seems likely to enter an association agreement with the EU, along with Moldova and Georgia, despite Russia's heavy-handed attempts to browbeat these "client" countries out of such intentions. It's possibly also a good sign that the Ukraine has joined the Tax Transparency Forum, although that could be regarded simply as another victory for the international association of spooks.
Mar 14, 2013 Ukraine: topsy-turvyIf a Communist leader is against a proposal to tax large bank deposits, then something screwy is going on, right? Well, what is screwy is a bill in the Ukrainian parliament which would put a 25% withholding tax on bank interest. It was considered back in 2010 and junked then because the banking sector was struggling to survive during the debt crisis. Now it has surfaced again. If even the head of the Communist party can see that it is a dotty idea, what does that say about the governing party? Ukraine is such a sad case. Wheat production was 22m tons in 2011; France managed 38m tons. World wheat production in 2012 was about 650m tonnes, so Ukraine manages about 3% of that. Of course, wheat is not the whole story, there is corn, other crops, livestock etc. But what you should know is that the Ukraine has the world's most fertile and productive soil for crop growing, called the "black earth", and could produce several times more wheat, corn and other grains if the agricultural sector was not so backward. Interestingly, global warming will only help Ukraine, agriculturally speaking, allowing a more extended growing season and faster growth. Of course what is really holding back the country is its perverse governance, fiscal and land ownership structures.
Feb 28, 2013 Ukraine: corrupt? me?So the EBRD (remember Jacques Attali's marble?) has finally come out and accused the Ukrainian authorities of endemic corruption in the tax and customs service. If only it was just among the tax collectors! The Ukraine is the most corrupt country I have ever worked in, and I have worked in most, including Russia. I don't forget a dinner with the ceo of a top US beverage multinational and the finance minister at which the ceo said that it was impossible to make profit in Ukraine within the law. Stop and think about that for a moment. OK, it was in 1997, and lots could have changed since. But I don't think it has. I don't read or hear anything to make me think things are different. Like the Russians, they have probably gotten better at hiding it, making it less blatant, but it is still there, just as dangerous, just as immoral and just as bad for the country and the mass of its long-suffering citizens. If David Cameron wants to learn about the business immorality with which he, supposedly a right-wing politician, peppers his speeches, let him try to open a pasty-stand in Kiev.
Sep 13, 2012 Ukraine: You probably don't need to be told not to go thereWe haven't given a ranking to Ukraine as yet, seeing as it is one of the most impossible places to do business in the whole world, and if by some mischance as a foreigner you start to make a profit, you will quickly find yourself either dead or in prison for tax evasion. But the spat between Russia and the Ukraine is worth noting with a black mark, especially since the Ukraine is nominally now a partner with Russia and Kazakhstan in the home-grown free-trade area which is intended to include all of the 'CIS' member states. Both Russia and the Ukraine are members of the WTO, of course, in the latter's case since 2008. It is difficult to see how either Russia's 'utilization' tax on foreign cars, or now Ukraine's threatened equivalent are consistent with these countries' WTO obligations, let alone their local free-trade regime. It's very sad, what has happened in the Ukraine: there are (or were) reformers a-plenty when the USSR broke up, and the Ukraine had a shining future as a European country. By now it could have been a member of the EU; why not? Instead, it is descending into authoritarian chaos in a spiral of corruption and mis-government.