Interview of Chairman of the State Tax Service of Ukraine Oleksiy Lyubchenko to online publication “Gordon”Chapter: News

Lyubchenko: For many politicians patriotism ends as soon as taxes have to be paid. I am for the disclosure of personal data. Then Ukraine would see its heroes (online publication “Gordon”)

Gordon, January 21

How many Ukrainians do not pay taxes, how many unemployed people per employee, how to encourage employers to create official working places and how much money is taken out of Ukraine abroad? Chairman of the State Tax Service of Ukraine Oleksiy Lyubchenko spoke with editor-in-chief of online publication GORDON Olesya Batsman in her author’s program, as well as about the volume of shadow economy, damage of lustration and the VAT scrolls. GORDON publishes text version of the interview.

- Oleksiy Mykolaiyovych, good evening.

- Good evening. Happy New Year.

- Happy New Year. Despite the fact that holidays are still ongoing, our air will not be festive but still more prosaic and practical. And we will talk about money.

- Yes, it’s always interesting to discuss money.

- What can we expect in 2021? Pensions, salaries will be paid to state employees? Everything will be fine or not?

- To answer this question, we need to understand at what coordinate point we are. Short answer: yes, everything will be fine. But in the amounts approved in the budget. Unfortunately, they are not enough for a normal and full life. But in the approved sizes, everything will be fine.

- Will there be enough money for pensions in the Pension Fund? Is there a lag?

- There is a lag of more than 40% in recent decades. If we say that the Pension Fund should be filled with a single social contribution. But today it is filled with cost of the main source only 60%. And 40% is a subsidy from the state budget. Therefore it is enough in those sizes which, I repeat, that are provided by legislative acts.

- Ok. One person who works in Ukraine, how many pensioners does he / she keeps? If it is ok to ask questions like that.

- To ask questions like this, you need to understand general statistics. We have a database of all individuals. That is, we know quite a lot since 1998. For 22 years, a lot of information has been accumulated at the tax authorities about our citizens: everything related to payment of taxes, where and how much they receive their salaries, about other incomes ... In general, all the sources from which they pay taxes. And so, we have such records in a database, namely 44.1 million. We understand that there is an anti-terrorist operation zone. Unfortunately, we are taking away this zone and Crimea, so we get 37.6 million full-fledged records.

There is also a concept of “economically active population”. These are, in fact, those who create the economy, who work, pay taxes, consume and create money cycle in nature. Almost 80% of them are of age 15 – 70 in the controlled territory. This is 29.6 million. How many people do we have working for one pensioner – I would not ask a question like that ... Our salary is the main indicator. It is received by 11.2 million citizens of Ukraine. These, in fact, are working places because everything else is fiction, some employment in some sector. We are talking only about the official sector: what is recorded by the State Tax Service. And we are talking about those working places where wages and taxes are paid, as well as single social contribution. And we have 11.3 million pensioners. That is, one pensioner per employee. About the same number of those who do not receive pension, do not work and do not pay taxes. That is, we can say with confidence that we have two with a spoon per one employee.

And if pensioners do it absolutely rightly: people have earned pension for their lives – then the rest of population is probably still worth talking about. We made an interesting map, divided it by region. And we absolutely clearly understand that we have more than 4 million people who did not appear on the tax map of Ukraine for 10 years. It is more than 4 million citizens of Ukraine!

- In which region taxes are paid the least?

- I understand approximately that you, asking questions, mean that it is the Western Ukraine ... There and Odessa region is represented...

- No, I do not mean anything.

- Western Ukraine is, of course. These are Trans-Carpathian, Lviv, Ivano-Frankivsk, Chernivtsi regions. But also Odessa and Mykolaiv regions...

- That is, regions where there are more labor migrants and those where smuggling is predominant are in the lead?

- Yes, it is. On the one hand, people left, unfortunately, to earn money. And here’s very important question – no matter where they get paid, no matter where they pay taxes, that’s good. That is, if a person has paid taxes in Poland, in Hungary, the state of Ukraine has no questions for him / her according to international agreements on the prevention of double taxation. If a person has not paid taxes either there or here – this is a question. This is a question of social contract and social responsibility. Unfortunately, the country is not getting younger and pensions should accumulate enough contributions from those who work.

- How many millions of people are not recorded there or here? Not in 10 years, but in principle. 10-11 million pensioners, about the same number of working people, about how many citizens there is no information?

- Just subtract: 29.6 million minus 22.5 million. It will be more than 7 million citizens, about whom we do not know where they are.

Today we can state that: we have a country where the tax minority has won. Today we have more people who do not create gross domestic product and do not pay taxes 

- Can we assume that these people work but are not officially registered and do not pay taxes (or employers do not pay taxes for them)?

- So. Expertly, I can assume that part of the population (over 4 million) is constantly working somewhere abroad. Constantly or variable. And about 5 million are those citizens who definitely do not eat air. Probably, they serve that part of the shadow economy, which today, according to various estimates, is 25 – 32% of the GDP.

- But actually more?

- You just need to understand what the “shadow economy” is. I would talk about productive part from which the gross domestic product should be created. And, accordingly, about a third of the gross domestic product is taxes.

- Let’s get back to those 5 million people who allegedly do not work anywhere ... If employers agreed to formalize their employment, they would start bringing taxes to the budget. I have a question: how to push employers to come out of the shadows and create official working places?

- I want to talk a little bit about something else to understand how to answer this question. 2020 was a year of challenges. The COVID pandemic and everything related to it have united our nation. Ukrainians gathered in Ukraine. Most of those who worked abroad mostly returned to Ukraine. And what’s going on? There is a very interesting situation, which we call the revival of demand – somewhere this year we can spend more than 3 trillion UAH. This is all that Ukrainians have in their wallets. The 1.2 trillion fiscal checks is what the state has controlled. 1.8 trillion UAH is uncontrolled expenditures of citizens ... This is a question of size of the shadow economy...

We do not understand where money from these 1.8 trillion UAH went. As of 2021, we still have a very serious challenge that has long since ripened in Ukraine. 2004 was the most successful year in terms of the number of working places. At that time, there were more than 19 million working places in Ukraine. Now, let me remind you, it is already 11.2 million. That is, in 2019 only a little more than a third of the active population had a working place, received wages and paid taxes and in 2004 there were 60% of them. This is the whole story. We lost about 3 million working places in the Crimea, Donetsk and Luhansk regions. But 5 million working places have been lost in the last decade. And this challenge remains.  

So far, it is difficult to talk about the figures for 2020, because we will see official data only in February. But I see a tendency that the decline in working places has at least stopped. That is, we are fixed on some platform.

I want to remind you of my role and place at the STS in this process. I fully support the President of Ukraine when he says that we must make a successful country. Absolutely correct thesis. In my opinion, no one will argue with him. A successful country is, in fact, a place for work, leisure, study and development. We are constantly being told from different angles that Ukraine is almost a territory ... But it is still a state. This is a place where people have to make money honestly and pay taxes. It is to make money, not to speculate on financial resources...

Successful years for Ukraine were 2006 and 2007. Even before the financial crisis of 2008, we had very serious results. Western financial institutions came in, there was investment and consumer lending grew. And already in 2013 ... This is an absolutely obvious series of dynamic figures. 2013 was the worst year when our non-tax majority won. When a part of population that had working place and paid taxes has become smaller than a part that did not pay taxes. And today we can say: we have a country where the tax minority has won. That is, today we have more people who, unfortunately, do not create gross domestic product and do not pay taxes.

- Oleksiy Mykolaiyovych, it’s all clear. We are talking with you about what our state needs to do to change the situation. Because only with a whip to force to come out of the shadows, I do not know if it will work. I want to hear your opinion: what should be the employer’s payroll tax in order for him to create working place? What should be the incentives, benefits for each created working place? There are world examples of what needs to be done so that the employer is interested in creating working places, so that I do not officially employ 10 people but 50. Conventionally speaking, they still work for the employer, only he officially registered employment with 10 people to reduce the tax burden ... What should be done?

- What needs to be done globally is a complex issue but described in theories. There are basically two of them. But I want to say what we can do as a Tax Service. General, most important thesis is that public finances should not be in debt. When Ukraine’s public finances are in debt, no investor will come here. I will just remind you that this year we have exceeded the service of public debt – it has become higher than domestic VAT. That is, we try to buy products – from this comes deduction of the value added tax but this money is no longer enough to service domestic debt. In my opinion, 120 billion was spent on servicing the national debt in 2020 and domestic VAT was only 118 billion. Although this is much more than last year.

- That is, there are two ways. The first way is that the state can relinquish social obligations. It would seem that the easiest way is to cut costs. But this is categorically impossible to do, because pensions are already on the verge of survival, as well as education, social security, medicine ... We understand that it is criminal. Well, or increase revenue. How? Thanks to the shadow economy. Here, the Tax Service over the past year has shown how you can help the legal sector of economy by casting shadow. And the legal sector of economy is responding to this. [Appears] equal competitive conditions. Entrepreneurs, whom with I talk, say that issue is not in the single social contribution rate of 22%, the issue is not in the VAT rate of 22%, not in the rate of 18% [personal income tax] but in paying taxes by everyone to keep equal competitive conditions.

- But the employer does not pay 22%. How much tax does the employer pay for employee in the end? About 40%?

- 20% of single contribution, 18% of personal income tax and another 1.5% of military levy.

In the current context, when the country has a huge amount of not controlled income, why should we run after income? Let’s look at the expenditures and we will control the balance of public finances over them.

- So you say that we have at least 60% of budget in the shadows?

- 60% of consumer expenditures are in the shadows. And there is a significant part of budget revenues. If each of the 30 million active population increases the fiscal check by 100 UAH, it is 1 billion of additional budget revenues per month.

- Oleksiy Mykolaiyovych, that is, the way I’m talking about (by expanding the number of official working places to reduce taxes and give some more preferences to employers in the form of cheap loans and so on) is not considered?

- You understand that the question is probably not up to me at all.

- I want to hear your opinion.

- My vision is simple. If we have 11 million of people who pay taxes and another 6 million do not, then in principle, it would be possible to expand through them the base of working places and the tax base. Then it is possible to reduce the burden on the payroll by 20 percent and transfer part of it to the sales tax, ie to record final consumption. The one who is richer consumes more. Strictly speaking, there would be money. And here, you know what’s worst? Organization of tax evasion schemes has become part of Ukrainian business culture.

- So.

- And it is terrible that organizers of very aggressive evasion schemes from payment of taxes don’t consider themselves as criminals. Well, in general. “And what did I do?” – it is what they think, sitting in expensive restaurants and moving in expensive cars. This culture (because of which, in fact, people die without receiving timely help in hospitals) is public safety. This is exactly an agreement that is under threat in the state. Strictly speaking, degradation occurs because criminals do not understand degree of their guilt.

- “What would you do?” Was punishment increased? How much should be arrested? Should the penalty be imposed for non-payment of taxes?

- It is necessary to ask a question about bringing at least to criminal liability for non-payment of taxes. I would increase measures and responsibility for non-payment of taxes. Because this is the worst crime. It is invisible. As now coronavirus: we do not see it but many children are sick. And it is invisible. I emphasize once again: this part of the criminal Ukrainian culture of creating schemes and non-payment of taxes leads to the fact that people then die in hospitals without receiving timely assistance. Everyone is constantly patriotic about the budget but many end their patriotism as soon as they have to pay taxes.

- Do many patriotic politicians not pay taxes?

- I am for the disclosure of personal data. And then Ukraine would see its heroes. I do not understand at all why personal data is protected in this way in our country. All officials were exposed. And this is very correct. By the way, when there was a story with the National Agency on Corruption Prevention and the Constitutional Court – our team categorically said that we give access to our declarations so that they are still in the public domain...

Personal data should be disclosed. We can come across the map from Odessa through Chernivtsi, Trans-Carpathian region through mountains, Lviv, Ivano-Frankivsk ... This map clearly demonstrates what is happening. How do we educate young people today? They walk the streets, looking at expensive cars. And the boys, I’m sure, are wedged – they want to buy expensive cars. But they do not understand how you can earn more than100 thousand USD in this country. And I don’t understand, as Chairman of the State Tax Service, how we have bought 1400 cars much more expensive than 100 thousand USD per car over the last five years. People spent more than 4 billion UAH. And their income in seven years – I checked – it would be enough only for the wheels of these cars. There and Bentley, Mercedes and McLaren ... They would not have enough money for wheels ... That is it on an eye only – unpaid billions of taxes. Is this a question for the Tax Service? Probably, to the Tax Service too. But how could they buy a car in a salon, when only 50 thousand in cash can be paid? Not millions, tens of millions. That is how?! System of financial monitoring, system of responsibility – there is a whole tangle of contradictions to which we must respond. That is, there must be a comprehensive work.

- Europeans are impressed by this fact, by the way. The first thing they say is, “God, what a poor country you have. But we don’t have that luxury on the street in Paris, Rome or London.”

- At us, on the one hand, closed personal data from each other, don’t pay taxes, hide behind a bank secret and on the other hand, really, we ask for money for debt service. Well, it’s no longer a secret: that our debt service is under 50% of the expenditure part... 

- Do you mean the budget?

- Last year, Ukraine spent more than 505 billion on servicing and repaying state debt. Back in 2007, this amount was a little over 10 billion. Do you feel the difference? – 50 times. That’s all the efficiency ... That is, someone did not see how you can buy an expensive car ... But no problem – buy expensive car. Do you have no income? Not a problem. We live like this and this is what happened in the country for 30 years ... Pay the tax and sleep peacefully. Believe me: they would pay. Therefore, time has just come in Ukraine when it is necessary to conduct a very successful, economically literate, demographically modern census.

- So. 100%.

- To make a zero declaration, to draw a line ... - I wanted to ask about zero declaration. Are you for? For as long as I can remember in political journalism, these conversations continue: “Let’s finally make zero declaration so that all the withdrawn money that politicians and big businessmen used to withdraw from Ukraine will return.” Several options for a zero declaration are being discussed: either they do not pay anything or 2–5%. “Pay for all this and then you’re white and beautiful, live in peace.” What do you think? How to do it?

- That’s how you said and it should be done. You just have to take a risk and create urgent zero declaration. The president has priority number one. This year is decisive.

- Did you talk to President Zelenskyi about this issue?

- I constantly hear stories about the need for zero declaration. I hear instructions from him to the relevant committees of parliament. And, as far as I understand, currently there is a very heated debate in what form to conduct it. Discuss different options: whether 5%, if you put on the account; if you do not want to show cash but say that you have it – 9-18%...

2020 is the first year when the GDP growth rate does not correspond to the growth rate of value added tax. For example, in 2019, the growth rate of VAT was 12% and GDP growth was almost 12%. In 2020, the growth rate of nominal GDP is 0.3% and VAT increased by 33%.

- Then there is no sense at all ... Nobody will pay such percent.

- There are different models. I am generally for zero declaration. This is not just a zero declaration – from tomorrow everything should work: 5 thousand – therefore, 5 thousand payments; 50 thousand in cash – therefore, 50 thousand in cash. Then it will all spin properly and money will work in the economy. But last year we had a cash mass of 500 billion. Officially, what the National Bank put into turnover. And we spent the same amount on repaying and servicing the state debt. But our amount of cash increased by 25% in 2020. That is from 400 billion became 500.

- Is it during the quarantine?

- That is, we assessed it as a safety cushion for citizens who simply stopped carrying money to the bank.

- Or got out from under the pillows. Because everyone tightened their belts.

- It is only about the UAH issued by the National Bank. And you noticed that inflation did not increase by 25%. These are the mysteries of Ukrainian economy, which has a huge shadow buffer. It probably helped survive in 2020.

We have already provided these statistics. 2020 is the first year when the GDP growth rate does not correspond to the growth rate of value added tax. For example, in 2019, the growth rate of VAT was 12% and GDP growth was almost 12%. In 2020, the growth rate of nominal GDP is 0.3% and VAT increased by 33%.

- How do you explain this?

- This is exactly the question that began to torment everyone. Yesterday I carefully read the reviews of report of the Ministry of Finance on the fulfillment of budget. And most of the experts just thought about it. But we explained it during each month of 2020 ... Our entire consumer group, which is imported to Ukraine, began to pass through the cash register more. Accordingly, taxes appeared. The fact that the real sector of economy lost because it could not compete with the shadow market...

And it couldn’t stand it in any way, because if you brought an iPhone or a TV set without paying taxes in full at customs, you sold it through the individuals – entrepreneurs system in huge Ukrainian networks ... We understand what tax rates are for individuals – entrepreneurs? Then you will not be able to withstand competition if you trade in white and pay 20% of the VAT in full, and there, look, you also made a profit ... You also have to pay the income tax ...

- We talked with you about how much money politicians who steal from the country and big business that earns money take out of Ukraine. According to your estimates, how much money has been withdrawn from Ukraine in the last five years?

- Olesya, I would not like to talk about this topic. For one simple reason: we once tried to name a number...

- You talked about 22 billion...

- I deliberately do not name the number. Because everyone perceives differently. What do we mean by inference? Is it the withdrawal of dividends, interest and royalties ... And if it concerns white, systemic business, then there is no problem in withdrawing royalties. That is, it is not a problem that they withdrew money, that is, they paid for what they received. The same situation with dividends and interest ... Terrible withdrawal [of funds] today is hidden due to grain exports, when foreign exchange earnings are not returned. This can be compared with tens of billions of UAH. Terrible withdrawal due to understated income...

Today we see information that wheat reaches the highest individuals – entrepreneurs’ price in the last few years, namely more than 260 USD per ton. And it will be interesting to look at declarations of exporters in terms of income generation and income tax.

- Fine. Do you understand how detrimental lockdown can be for Ukrainian business? First of all for small and medium.

- Well of course. Presidential initiatives, namely the same 8 thousand, compensation from single contribution and exemption of micro-businesses from paying taxes for six months is some support after all.

Globally, Ukrainians will not consume less. Accordingly, the planned GDP growth is, in my opinion, real. The tax part that we control is also real. But what will not be easy is a fact. And “not easy” – it’s just because of the debts that will need to be serviced.

- How many working places will be closed due to lockdown?

- If we talk about all areas that should be closed, it is about 200-240 thousand working places. These are all those who work in areas that could potentially be closed during the lockdown. 

- Oleksiy Mykolaiyovych, as of today, statistics shows that the number of sick patients is decreasing every day comparing to when this lockdown was developed and introduced. Why introduce the lockdown then? We believe our statistics, we are not deceived? So why is it ongoing now?

- That’s something and I definitely do not have medical education. But, probably, it is necessary to break a chain. I'm in favor of breaking up. In fact, I also worry about getting sick less.

- When there were 15 thousand sick patients per day, the lockdown was not introduced, it was not necessary to break. And now, when 4 thousand are infected every day, is it necessary? Where is the logic?

- Well, I’ll still say what is necessary. Because people who work at Tax Service are also. 25 thousand staff, we had an average of 350 patients. And now less than 100. Maybe people, having listened, stopped gathering as big companies.

- (With sarcasm). And of course. Especially on the New Year’s holidays. I want to quote Igor Umansky. At the beginning of year, when the Tax Service was headed by your predecessor, he told in detail in an interview with Dmitry Gordon that only for the so-called VAT scrolls, Ukraine annually receives about 60 billion UAH. Almost a year has passed and in a recent interview he said that situation at the Tax Service has not changed and even worsened. It turns out that you did not remove this scheme. Explain to me the situation with this particular story, who is right: you or Igor Umansky?

- Everything is simple and complicated at the same time. Who is Igor Umansky?

- Economist. We can list its regalia ...

- Igor Umansky agreed in the spring 2020 to become Minister of Finance. Even more, he managed to submit a budget sequestration. Correct? Then something happened and the Minister of Finance was replaced. Already by inertia the sequestration of the budget was voted in parliament. So at the time when the Minister of Finance was Oksana Markarova, the level revenues that the Tax Service was to provide to the general fund of the state budget amounted to 491 billion UAH. After the sequestration suggested by Igor Umansky, the Tax Service was to provide 394 billion UAH, ie minus 97 billion UAH. Igor Umansky suggested to reduce revenue side of the budget almost by 100 billion UAH. I asked him a question: why, knowing about such reserves, did he offer to reduce the income part? And for the most part, the revenue side was suggested to be reduced by value added tax.

Tax Service that I manage for eight months, controlled and the budget received not less than 507.5 billion UAH. Not 394, which was suggested by Umansky through sequestration but 507.5. So you can say a lot. I hope they understand that chains in economy are not built one on one. This is a complex relationship of inter-business operations. But the fact that our oranges have not been converted into fuel for a long time and the fact that our underwear is not made into counters – that’s for sure.

- Oleksiy Mykolaiyovych, you told that asked Igor Ivanovich publicly or not publicly why he laid down the lower income from the Tax Service. Did he answer you?

- No. I invited him to visit to show how people work until 24 hours of the night. But he has not arrived yet. 

- Fine. Then we will deal specifically with this scheme. You said that there are “scrolls”. Did you manage to neutralize this scheme? And if so, what income did Ukraine get from the fact that you destroyed this scheme?

- Since November 2020, when the system of monitoring risky operations changed, there has been some testing of our IT systems for the possibility of conducting various critical, I will call them softly, operations. And, in fact, a criminal case that the whole country knows about revolved around the understanding that something was happening. But it just happened...

- Do you mean the case regarding Nefedov and Verlanov?

- No. This is the case that was initiated, in my opinion, in the summer of 2019 around the interference in IT-systems of the Tax Service ... What is the system of monitoring risky operations? The criteria are clearly spelled out by a Resolution of the Cabinet of Ministers. If a company and operation meet certain criteria, the machine misses registration of tax invoice. There is one point: “Available information at the tax authorities.” This means that there is information from law enforcement agencies that there is an open criminal proceeding and there is a problem. Then the tax authorities begin to pay more attention to operation. In this case, registration of tax invoice is suspended. And a company has several scenarios. For the real sector of economy it is necessary to submit supporting documents to the commission. Mostly they are satisfied and they pass. And the second scenario is not to apply at all. You tried to carry out a fictitious operation and it did not pass. “Well, it didn’t work out.” Since the spring of 2020, we have more than half of such non-appeals regarding suspended operations. In general, we suspended less than half a percent of all operations last year. Tell me: is the tax authority entitled in the case of 30% of shadow economy, which is trying to enter the real sector of economy with its services? Before that, in Ukraine, the profitability of business, which was called VAT minimization, reached 2 thousand per annum. But these are drugs, weapons. That’s why people can’t stay there for sure ... But the real sector of economy paid in terms of COVID, in terms of falling real turnover by 33% more VAT last year...

Let Igor Umansky answer this question. We blocked the vulnerability of system jointly with the Security Service of Ukraine. And on May 15, we found it. It was very cunning and simple: there is a Resolution of the Cabinet of Ministers and it was incorrectly translated into system’s language. System works according to the algorithm ... I forgot to clarify a little detail. And thanks to this little forgotten detail, absolutely fictitious operations slipped through. We removed this story.

- Ok. And what other schemes have you personally managed to destroy during this time?

- I think everything related to the value added tax is a complex issue. I want to remind you that last year the issue of tobacco products, that the VAT wasn’t paid, “paper” sales of credit was heard very loudly ... We have had a mass inventory and mass audits for the last six months. We had a right to it. This is an excisable group. We checked the wholesale warehouses of tobacco products for a year, we didn't find much. We didn’t find much where it should have been. And there are sums amounting from 4 billion UAH for the budget. We destroyed scheme that I myself, so to speak, like ... Although I don’t really like anything because it hurts. But we have destroyed scheme of the so-called interaction of the foreign market with Ukrainian domestic market. That is, citizens imported consumer goods and then these goods went to the markets and were sold for cash. There were attempts in previous years to declare the VAT paid at customs during the importation to reimburse balances of goods and they were successful...

Thanks to the interaction with law enforcement agencies ... Because, let me remind you, the Tax Service is mostly an intellectual service structure and it has no law enforcement functions: to go to the warehouse and check the balance of goods – people may not let you. And therefore it is necessary to include various mechanisms. And here also audits are forbidden ... Do you remember that since May the Tax Service can’t conduct documentary audits? All scheduled for April have been suspended and the statute of limitations has also been suspended. And we are waiting for the country to recover from the coronavirus infection in order to continue the control work. Because, let me remind you of a simple truth: our favorite taxes are those paid by someone else. And when we have more than 40 billion risks of suspended audits, plus this year we see another 100 billion risks that pass from previous years ... These are significant figures that are worth going out and confirming our right or the payer’s right. This is a reciprocal process.

- Oleksiy Mykolaiyovych, should the money be taxed that comes to Ukraine from workers? Given that this money is, in fact, now the largest direct investment in Ukraine.

- 12 billion USD is big money, I agree. The general rule is simple: Ukrainian citizens pay taxes on the income they receive. No matter where. We have signed double taxation agreements with absolutely all countries where our people work. If our citizens have paid taxes abroad: in Poland, Hungary, Portugal or elsewhere – than in Ukraine, none has a right to demand taxes from them. All they have to do is to submit tax declaration. This is a constitutional norm. Article 67 of the Constitution of Ukraine stipulates that: “All citizens of Ukraine must submit tax declaration for the reporting year to the tax inspections.”

- Ok. How do you feel about the idea of making Ukraine one big offshore? Some politicians are actively promoting this idea as one way to quickly get out of the financial pit ...

- Once I didn’t even think about it. This is a new story for me ... Olesya, we are very big for offshore. We are a very big country in fact.

- And the prospects are great.

- Some separate spheres such as technoparks, some intellectual things connected with the IT industry here, of course, it is necessary to develop and create conditions. If you want to call them as an offshore, let it be offshore. And so that there was zero tax ... We do not have this pillow.

- You know, it will be necessary to make a request in the “Diya” program about statistics of appeals in respect of which 8 thousand UAH of financial assistance was denied. That is, many people learned that they were not in a formal employment relationship with their employers until they came to receive state assistance during the lockdown.

- Why do you think investors do not come to Ukraine?

- Unequal competition is one reason. Look who had access to natural resources in Ukraine. Protection of private property and raiding is reason number two. There are several other factors. Taxes are definitely not in the top five even.

- Oleksiy Mykolaiyovych, during work in the Tax Service you received any threats or, God forbid, there were attempts?

- I am generally an optimist. So when I’m even called as “bad”, I feel good about it. So, I’m on the right track.

- Were some or not? You did not answer.

- Law enforcement agencies are more visible. As of today, at this moment, the State Protection Department is assigned to me as Chairman of the State Tax Service of Ukraine.

- When you were appointed to the position, the People’s Deputy from “Golos” Yulia Klimenko told that you need to be lustrated because you worked during time when Yanukovych was the President. She said that she would apply to the special bodies ... How did it all end?

- Here are some highlights. The first is that I worked during all presidents. I started working after the institute for Kravchuk, then I worked for Kuchma, then for Yushchenko, then for Yanukovych, then for Poroshenko, then for Zelenskyi. I have a history, I have an employment record book, I am in the tax base, I have official income and I have officially paid taxes.

- As for whether I need to be lustrated ... But you can do anything with me but according to the law. According to the law, lustration applies to those who worked in the Ministry of Revenue and Duties. Norms of the law are regarding the heads of bodies that formed and implemented tax policy. In Ukraine, the only monster was the Ministry of Revenue and Duties, which gathered customs, tax authorities and tax police.

- Ministry of Revenue and Duties …

- So. “The way you call a yacht ...” And this body formed and implemented tax policy. I never worked for the Ministry of Revenue and Duties. I worked at the State Tax Administration of Ukraine, was a deputy for several years. But this is the body that implemented tax policy. And norm of the law on lustration clearly states: “formed and implemented”. Without com. Therefore, this issue has long been tested.

- Do you like the law on lustration at all? Is it correct?

- I would do personalization. Therefore, in its current form, it, unfortunately, took out of the public administration, in which it is not easy to find professional people, the middle level, which, I believe, could not be accused of any processes in which they did not participate. That is, there are personal claims that are free. We have lost many professional middle managers...

- Oleksiy Mykolaiyovych, when you answered Yulia Klymenko, in fact, you emphasized that you have been paying taxes regularly all these years. I understand correctly that this was Yulia Klymenko’s message in the sense that you, as Chairman of the State tax Service have already understood whether she pays taxes?

- You really ask interesting questions.

- I just heard it between the lines in your answer.

- You heard right. I will categorically say that personal data must be disclosed. Especially of public figures and people’s deputies. Before a person casts his / her vote, I, as a citizen of Ukraine, would be interested to know how much my candidate received income and paid taxes. If people go in  politics, they have to receive official income and pay taxes officially, to be an example.

- Many current people’s deputies are malicious taxpayers? What percentage? We will not name surnames.

- In my opinion, there is an open register of natural debtors. You can look there. I did not bring it all together. Because in fact, it may be interesting to someone but it does not work. This is a political activity that does not give results for us as tax authority ... That is, you just see: a person participated, was a founder, how many taxes were paid ... We have a lot for 2019 ... And there, by the way, there are people’s deputies. In my opinion, 76 people declared income of more than 100 million UAH. Paid taxes, declarations were submitted. This is the majority or the minority – we did not think so.

- Thank you very much for the conversation. I think there will be a lot of food for thought.

- Thank you too. Unfortunately, I have such job, you know: it is impossible to be a tax controller and pleasant at the same time. How to be wise and love. Therefore, in any case, we will try to meet and see off the Tax Service in 2021 with love. Because it’s really important. But citizens who pay taxes must create such conditions that they do not even know about us. That would be very good.

- Let your wishes come true.

- Thanks. 

 

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