Arseniy Yatsenyuk on Gov't Action Program: After Russian military aggression stopped, the economy must embark on a new track

The new economic policy of the Government envisages expense reduction, simplification and shortening of taxes, control over transfer pricing, active export promotion and protection of the Ukrainian markets. This was announced by Prime Minister of Ukraine Arseniy Yatsenyuk in the course of presenting of the Cabinet of Ministers’ Action Program at the Cabinet meeting on Tuesday, 9 December.

Arseniy Yatsenyuk stressed that the military economy finds difficulties to ensure stability, "But it is our objective. After Russian military aggression stopped the economy must embark on a new track".

First of all, according to the PM, it is necessary “to undertake the way of drastic reduction in expenditures of the public sector", "We are talking about reduction share at 10% concerning expenditures of the public sector. This is the task we have set for the following two years."

Direct approaches to cut expenses and the budget will be determined by the Government in synergy with the partners from the International Monetary Fund, the World Bank and other international financial institutions, Arseniy Yatsenyuk explained and noted that the first round of negotiations with the IMF was taking place this day.

In the framework of reduction and expense optimization it is required adoption of a new State Budget and amendments to the Budget code.

Moreover, the Government also submits to the Verkhovna Rada the amendments to the Tax Code, which contains reduction of the number of taxes from 22 to 9, "Certain taxes are merged, another part of them are abolished, a part is altered".

"We advance rather methodically. In a first stage we will reduce the number of taxes and change the taxation base. In addition, we are to combine accounting and financial reports in compliance with the international standards", Arseniy Yatsenyuk explained.

Apart from that, he informed the Government offered to make “certain radical, risky but correct steps” to legalize salaries. “Our goal is to reduce single social tax from 41% to 15% on the gradual manner. It will enable to bring salaries out of the shadows and legalize them”.

"We are convinced that such a radical solution in the next two years will yield into a significant increase in both revenues of the budget and real increase in incomes of the citizens. And, accordingly, their social benefits and pensions".

Arseniy Yatsenyuk also singled out an issue of taxation of large incomes, "We adhere to an equity principle: who earns a lot, he must pay taxes". He reminded that there had already been adopted a number of tax changes on the taxation of the so-called oligarchs, "We should move further to preserve an equity principle in taxation".

"In order to legalize wages we provide, on the one hand, low tax rate, on the other - the Government will introduce additional liability for payment of shadow salary and shadow cash turnover. The sooner we reduce the cash turnover, the faster it will give us an opportunity to legalize salaries, and to really curb corruption in the country", - stressed the Head of Government.

Regarding small and medium businesses, the Government, in its programme of actions, offers “two simple solutions”, “First is to halve the single tax for small and medium businesses. Second – not to check them for two years".

In the framework of the implementation of the new economic policy of the Government, according to Arseniy Yatsenyuk, will suggest to the Parliament to adopt the law on tax compromise, "This is an introduction of zero tax return. Everyone must say what they have, to declare it and reveal. It is our start. In the aftermath the Government considers it necessary to introduce a general income declaration system. And this will provide an opportunity to fight corruption and claim an equity principle in the distribution and taxation of incomes. And it corresponds to European and international standards".

The PM also said that the Cabinet of Ministers intended to make changes to the transfer pricing law to introduce “a transparent and efficient system of taxation of large business", "The first steps were made five months ago, when for the first time in 20 years there were imposed high taxes on profitable business – rents on mineral resources, oil, gas".

"In the framework of the law on transfer pricing we will implement a scheme where tax evasion by large companies through offshore or any other schemes will be closed. We support large business, but we demand from big business to honestly and transparently pay taxes", Arseniy Yatsenyuk explained.

Aimed at de-monopolization of the economy, the Government envisages in its program the need to adopt a new law on economic competition, “Monopoly implies regression, competition - progress and development. Therefore, the formation of a new Antimonopoly Committee of Ukraine and approval of a new law on economic competition".

"Everyone who is a monopolist must be subjected to an antimonopoly inspection and either to be deprived of the monopolist status, or to act abiding by the state regulations like companies, which are controlled by the state, as they are monopolists on the market," he said.

The objectives of the Government include promotion of Ukrainian exports and protection of Ukrainian market. Arseniy Yatsenyuk informed that Ukraine had already increased its export volumes to the European Union by 12% and used almost all the quotas on supply of agricultural products in the European Union, "But this is just the first step. Now we need to think about the quota increase and conquering markets both of the European Union and other countries".

According to Arseniy Yatsenyuk, the Government has set a task to start negotiations on establishing a free trade area in particular with the following countries: Canada, Turkey, Israel, the Arab Gulf countries, Western Africa, "The Office of Trade Representative, which was established by the Government, will carry out an assertive policy to protect a Ukrainian manufacturer and to develop the new markets. By all tools and methods we possess, including through the World Trade Organization of which we are a member".