The scale of abuse of the tax system in Ukraine in 2013 amounted to over UAH 200 billion – reported Igor Bilous, First Deputy Minister of Revenue and Duties of Ukraine. According to Mr. Bilous this amount was just an estimate for ‘tax pits’. Thus the estimates presented by the ‘Open Society’ Foundation at a press conference in early January 2014 prior the adoption of the national budget for 2014 were officially confirmed.
According to the ‘Open Society’ Foundation estimates, despite the country was on the verge of default, the previous government continued inefficient financial policy towards companies and entire industries, ‘laundering’ current capital of the enterprises through VAT non-refund, financing of inefficient government programs and tax exemptions for individual companies. This lead to vainly spending of budget and unsupported increase of social expectations of employees of budgetary supported companies. According to Igor Bilous, “in March, the amount of VAT refunds amounted to 2.3 billion, and there are no ‘tax pits’ in the list of candidates for such refunds, along with the fact that in March the general fund budget received UAH 17.4 billion, which is slightly higher than the amount for corresponding period last year”.
“Total revenue losses from excessive and inefficient state aid, non-transparent and non-competitive procurement and deficiencies in the VAT administration and other schemes with signs of corruption risks will be more than UAH 188 billion, or about USD 24 billion. This equals to almost a half of the expenditures in the draft budget for 2014. Improper administration of the personal income tax and land tax that form the basis of revenues of local budgets, had been coupled with an inventory of smaller ‘laundering’ schemes in the budget. These allow estimating the loss of the national budget in the amount of exceeding UAH 200 billion (equivalent to USD 25 billion).” - said Ivan Sikora, Director of the ‘Open Society’ Foundation during the press conference on the eve of the vote for the draft national budget of Ukraine in Parliament on 15 January 2014.
In less than 3 months the representative of the new government of Ukraine has recognized the correctness of estimates of budget expenditures that have been made previously by ‘Open Society’ Foundation.
