Payment of taxes is a civil obligation or compulsory obligement?

State Tax Service of Ukraine welcomes frank debate that has begun in society regarding the taxation of citizens’ income, particularly those who receive income in other countries. In this matter, the STS is based, first of all, on everybody’s honesty and equality before the law.

Obligation to pay taxes and fees is defined in Article 67 of the Constitution of Ukraine: “Everyone is obliged to pay taxes and fees in manner and amounts prescribed by the law. All citizens annually submit their property and income declarations for the past year to the tax inspections at place of residence in manner prescribed by the law”.

So why some people perform this obligation honestly and others only expect the state to fulfill social guarantees, insurance benefits, decent pensions, criticize local authorities for the lack of kindergartens, improper repairs in schools and hospitals? Few of them thought about how much taxes they paid for their country’s development?

As of today, legislation clearly regulates mechanism for payment of taxes. Receiving income specifically from a person who is not a tax agent and foreign income – citizens must submit property and income declaration. It determines the amount of received income and amount of taxes determined for payment.

Herewith, if a citizen received income abroad and paid taxes there, such citizen will not have to pay taxes again in Ukraine if such supporting documents are provided. To this end, our country concludes agreements on the avoidance of double taxation with other countries. Under these agreements, namely the Pension Fund of Ukraine may take into account the length of service in another country to determine the right to receive pension.

Such countries include the former Soviet Union and the CIS (Armenia, Belarus, Kazakhstan, Kyrgyzstan, Russian Federation, Moldova, Georgia, Azerbaijan, Tajikistan, Turkmenistan, Uzbekistan), the Baltic states (Latvia, Lithuania, Estonia), the near and far abroad (Poland, Czech Republic, Slovakia, Bulgaria, Spain, Portugal, etc.). Full list of countries with which agreements have been concluded is posted on website of the Pension Fund of Ukraine. As follows, submission of declaration is not only a citizen’s duty but also protection of his / her rights.

In order to be credited with insurance experience acquired abroad in countries with bilateral agreements, a citizen of Ukraine must officially (legally) work abroad (in some cases not less than a certain period of time – a year) and pay all relevant contributions there, including social contribution.

That is, as we can see, the law prescribes all rules that allow people who work abroad and earn income there to remain virtuous citizens in their native country and take care of regional development where they return home, where their parents live, study their children, where they find shelter and protection.

This became especially noticeable during the quarantine introduction due to coronavirus disease.

Building economically developed country depends on all its citizens, their activity and patriotism in desire to develop it, fulfilling civic duty.

But let’s look at statistics.

The State Register of Individuals contains 44.1 million records. With the exception of an anti-terrorist operation zone, the number of people is 37.6 million.

19.7 million or almost 45% of citizens received various incomes in the amount of 2.0 trillion UAH during 2019.

Of the total number of individuals, 6.8 million people or almost 35% received exclusively passive income in the amount of 169.7 billion UAH (income received in the form of interest, dividends, insurance payments and indemnities, as well as royalties).

Income in the form of wages received 11.6 million people in the amount of 1.153.1 billion UAH (or 57.3% of all income received by citizens (2.013.3 billion UAH)).

Regarding the economically active population (age 15 – 70 years) – 13.3 million people do not receive income, while 5.6 million people or 42% have not received income during the last 10 years.

As of the Declaration campaign – 2020.

Despite the difficult situation, our compatriots have shown a conscientious attitude to their duty. Since the beginning of 2020, almost 600.000 property and income declarations have been submitted to the supervisory authorities.

Total income declared by the taxpayers is 104.4 billion UAH, which is almost 8.4 billion UAH or 9% more than during the same period in 2019.

The main STS’s thing is to ensure compliance with tax legislation by all participants of tax relations.

Therefore, we consider it necessary to have a broad public debate about the taxes we all pay. Society can agree on any rules but they must be fair and equal.

We all need to understand that by not paying taxes, we are not deceiving the abstract “country” but each other. After all, if less than a half of those who use public services pay for them, then what kind of quality of such services can we talk about?

So, we welcome the discussion regarding tax liability to society and ready to continue it.