Due to the retrospective increase in taxes from October 1, Ukrainian business began to massively transfer employees to the “shadow”. Advanter Group founder Andriy Dligach announced this during the “Made in Ukraine” Business Forum.
Dligach noted that the state actively changes the rules of the game retroactively, and many entrepreneurs react to this by transferring part of their staff to the shadow sector. According to Advanter Group forecasts, this decision can increase the level of shadowing of the economy by 10 percentage points.
In his comment for the EP, he clarified that it is about shadowing of salaries. Currently, about 35% of wages in Ukraine are paid unofficially. This share may grow even more due to new tax changes that limit business opportunities. The results of the Advanter Group study, conducted on the basis of data modeling of 220 companies, show that the majority of enterprises are considering the option of downsizing or returning to the practice of paying salaries “in envelopes”.
Dligach also emphasized that instead of increasing the military levy, it would be better to increase the value added tax (VAT). He noted that VAT is paid by all market participants, while the military levy falls on the shoulders of “white” businesses, which already pay taxes conscientiously. According to him, the increase in the military levy will not bring significant revenues to the state budget, but, on the contrary, may increase the state’s expenses due to the need to raise the salaries of state employees.
“According to our calculations, a 2% increase in VAT will bring the budget 77 billion hryvnias, and an increase in the military levy will lead to a loss of 40 billion, as the state will be forced to raise the salaries of “budget workers” at the same time. If there is no increase for budget workers, then the levy will bring about 30 billion hryvnias , or half as much as VAT could”, – noted Dligach.
He added that increased competition for skilled workers is forcing businesses to raise wages, and the additional increase in the military levy only adds to the pressure, forcing companies to go into the shadows.
