Opening statement by Prime Minister of Ukraine Arsenii Yatseniuk at a session of the Cabinet of Ministers of Ukraine, March 25, 2014

My greetings, dear colleagues!

I would like to convey greetings from all mayors of towns. We have just had a meeting, discussing a local reform. My position is invariable: making changes to the Constitution, liquidating regional state administrations, creating prefectures, depriving the Prosecutor’s Offices of the general supervision function and handing it over to the prefects at the local level, if we really wish to change the system. But it is a separate issue. The concept will see its approval at a Government’s session, I will inform you.

Respected colleagues, we have today two crucial blocks of questions, which, properly speaking, are interconnected. It concerns making changes to the financial and budget legislation which require to be immediately adopted by the Ukraine’s Parliament. The package is aimed at stabilizing of state finance area, preventing actual bankruptcy, receiving an IMF program and obtaining billions of credit resources from G-7 participating countries, the EBRD, the World Bank, the European Investment Bank. Finance Minister O. Shlapak is to report in this issue. The decisions are not simple but these decisions had to be taken 20 years ago.

The second block of questions, and I would like to start from that, is not just the change of taxation system, but in the first place – changes in administration of taxes, fight against tax loopholes, against evasion from paying taxes, against corruption in tax administration and at the customs.

It also embraces counteracting counterfeiting, counterfeit vodka, organized criminal groups who earlier controlled the customs, the tax administrations, tax agencies and had managed to build a system business on money chase from the pockets of Ukrainians.

I reported you at the previous Government’s session that the tax and customs agencies had received a clear instruction within two weeks to stabilize revenues of the state budget and provide with concrete examples of activities directed to corruption fight, counteracting crimes in customs and tax areas.

Yesterday we had an enlarged meeting with participation of security services, tax and customs services and tax militia, the central bank, the Finance Ministry and the Justice Ministry. I would ask to report Ihor Olehovych, Vitalii Petrovych and Volodymyr Petrovych about what is happening in the country now, what real steps have been made in the direction of liquidation of tax loopholes and prosecution of those plundering the Ukrainian budget.

***

I would like to have brief data concerning what will be changes in the direction of administering the taxes, simplifying the tax system and work conditions for Ukrainian entrepreneurs.

I address the respected First deputy Prosecutor General Mykola Yaroslavovych with a request that the Prosecutor’s Offices could employ their resource and law everyone, including the top officials, who either today or yesterday were involved into embezzlement and organized criminal groups.

Apart from that I would like to address the Finance Minister, tax and customs administration concerning several issues.

The first. Vadym Petrovych, it is your task: the financial crime investigation service must be set up within the country. The tax militia must be liquidated. The functions which are inappropriate for MIA and SSU, and I evaluate the position, Arsen Borysovych, discussed with you earlier, and, in particular, counteracting economic crimes must be handed over to the financial crime investigation service, as must be the relevant SSU department. There must be the only body dealing with fight against crimes in the tax area instead of bribery and recovering funds from businessmen.

Thus I request to prepare a concept of forming the financial crime investigation service and ready relevant draft laws in order to submit that for considering by the Parliament immediately.

The second – VAT. The special services reported me that through February the previous administration of the Ministry of Incomes had reimbursed UAH 5 billion that flew in the unknown direction. Firstly, it [the sum] must be found.

Secondly, in terms of VAT. We must fill circulating assets of the enterprises for which VAT wasn’t reimbursed. There is no other way than Domestic Government Bonds emission with receiving a hundred percent funds of the National Bank from that. Business must receive a tool and owing to this tool it must obtain an opportunity to fill up the circulating assets. There won’t be any government bills and other jinks made by the previous authorities and they are inadmissible. There should be equal environment, government securities, understandable grounds for issuing targeting to fill the economy with hard cash.

The third. Excise duties. Volodymyr Petrovych, Ihor Olehovych, if we follow the way of excise labels, it is the dead-end road. The list of excisable goods must be transferred into an e-database exceptionally. There is an international experience. As far as I know among the EU participating countries there is a number of leading ones that have launched an e-database of excisable goods. If you compare this database with your VAT database you will have a true picture which enables to avoid paying taxes.

And to wind up, in terms of appointments in your subordinate departments. I warn the political forces concerning interference into activity of the customs and tax services. The views of the political forces must be spoken in the Parliament and through elections. 

With regards to the activity of the mentioned bodies, it is exceptionally within your responsibility, you are to take cadre decisions and you bear responsibility for these cadre decisions. Hence, quotas, parties, NGOs and associations have a right to exercise control as envisaged by the legislation, but I won’t allow forming any joint stock companies in tax, customs or any other departments.  

I thank media people for attention!