Tax Committee Meeting

On 5 November the Chamber Tax Committee held its regular meeting devoted to discussion of the Chamber’s proposals to electronic VAT administration. The meeting’s participants overviewed the development and implementation of the Government’s initiative on introducing electronic VAT administration as well as the next steps of the Chamber Tax Committee in this regard.

Based on results of the discussion the Chamber sent to the Prime Minister of Ukraine proposals on making amendments to the Resolution of the Cabinet of Ministers of Ukraine On Certain Issues regarding Electronic VAT Administration as well as the Chamber request to the State Fiscal Service of Ukraine on clarification of the number of unclear aspects of application of electronic VAT administration.

The meeting’s participants also considered a presentation on the alternative concept of electronic VAT administration developed and presented by representatives of civil society.

Influence of Monetary & Exchange Rate Policy on the Real Sector & Attraction of Foreign Investments

On 6 November  the Chamber held a roundtable discussion called Influence of Monetary & Exchange Rate Policy on the Real Sector & Attraction of Foreign Investments to Ukraine where representatives of the National Bank of Ukraine and international financial institutions informed the business community about existing mechanisms to stabilize the monetary and currency situation in Ukraine, highlighted the causes and consequences of the temporary restrictions on currency transactions as well as ways for improving the situation on the currency market.

Taras Kachka, Chamber Vice President of Policy, highlighted that the key issue Ukraine faced in terms of monetary policy is not only the turbulence of the monetary policy itself, but sometimes the slightly different interests of the real sector of economy which operates in different areas. The tactics and strategy of reforming the financial market may be varied. Correct and useful solutions could be found only through open communication among all stakeholders.

Representatives of the National Bank of Ukraine noted that the actions of the regulator, that is forced now to take some complex, unpredictable measures, are always aimed at ensuring stability in the banking environment and economy harmonization. Oleksandr Pysaruk, first deputy governor of the NBU, have stated: “The priority for the NBU is overcoming of challenges which arise in such an unstable situation in the country. As the Central Bank we have to impose some administrative restrictive measures which certainly influence the business. We are also not always happy with this but we clearly understand that these measures need to be implemented in order to stabilize the currency market and build an effective banking system in the perspective”. Oleksandr Pysaruk added that all restrictive measures introduced by the Central Bank will be abandoned as soon as the situation calms down and changes for the better are realized: “My advice to all companies is to wait until the situation in the country is finally adjusted and not to insist on their rights under any circumstances.”

Jerome Vacher, the IMF’s resident representative in Ukraine, has indicated that implementing a floating exchange rate policy has been a long standing recommendation for Ukraine made by the IMF.

At the meeting the macroeconomic indicators of the Ukrainian economy have been also analyzed. Qimiao Fan, the World Bank Country director for Belarus, Moldova and Ukraine, stated that the current economic situation remains extremely challenging but recent preliminary data showed that the decline of economic activities in Q3 has not been as severe as some have expected, due mainly to the good performance of the agriculture sector. Mr. Fan pointed out that Ukraine’s move towards a flexible exchange rate has been good as it acted as a shock absorber and helped the current account to adjust rapidly.

According to the experts further decreases of FX deposits, increased demand for FX in general as well as reduced supply during the intensification of the military conflict in the east over the summer period led the NBU to implement further controls, choosing between further volatility or implementation of restrictions.