Transparency in question: what is wrong with the ‘white list’ of the Ukrainian tax authorities

In Ukraine, there is a business that the state officially trusts. This “white business club”, which the State Tax Service forms based on tax discipline. Currently, there are 8,199 companies and entrepreneurs in it – 55 less than in the previous composition.

To the list are included those who honestly pay taxes: legal entities on different taxation systems, residents of Diya City and FOPs. The biggest increase was in the case of individual entrepreneurs — plus 581. In general, “white” companies provide more than 16% of all revenues to the state budget.

The vast majority of companies from the first edition of the list have retained their status. Those who did not meet the criteria were excluded. To support business is working more than 600 compliance managers who provide advice and help maintain compliance with the criteria.

What are the selection criteria for the “white list”?

That enter to the “white business club” in Ukraine, it is not enough to simply pay taxes properly. This is a new status, a kind of calling card of honest entrepreneurship, which is given for systemic responsibility. And this list is formed not behind the scenes, but on the basis of clear criteria defined by the tax service – although not without comments from the business side.

Last year, as before, payers with a high level of trust are those who does not have debts to the budget, submits reports on time, pays salaries not lower than the average industry level (with a coefficient of 1.1), does not appear on the lists of risky companies and is not in the stage of liquidation or bankruptcy. So that a legal entity gets on the list, its average salary should be higher than the average for its region and sector. If in IT in the region they pay an average of 28,000 UAH, then the company must show more than 30,000 UAH.

Entrepreneurs in this process are not simply “marked”. To every member of the club appoint compliance manager — a specialist who helps maintain compliance with criteria and avoid problems with tax authorities. This is a new level of interaction: not a punitive inspector, but a consultant for white business.

It is important that the formation of the list is automated, i.e. it is based on data from the electronic account of the payer. But not everything is decided by the algorithm, there is also a place for human analysis: if a business has questions or does not agree with the result, it can ask for clarifications, submit objections, and sometimes get listed again.

However, this story is not without shadows. Last year in January, journalists discovered that the list included companies related to those involved in corruption cases and even sanctioned persons. After the scandal, the European Business Association appealed to the Ministry of Finance and DPS with a proposal to review the criteria, taking into account not only financial indicators, but also the ethical reputation of companies.

“White business” in Ukraine: less checks, more trust — and some armor

Getting into the “white business club” is not just prestigious. This means simplifying life in a country where every entrepreneur has learned to live on guard for years: suddenly an inspection, a mistake or a fine. For the selected 8,199 companies and entrepreneurs who entered the updated DPS register in April this year, the state finally extends not a club, but a hand with some specific preferences.

First of all, “white” enterprises receive real and legally formalized protection against inspections. Yes, they will not be subject to routine tax audits unless new risks emerge. At a time when inspections have become the norm, it’s like breathing heavily. Camera and documentary checks – in particular those related to VAT – are reduced up to 5 and 10 days, respectively. This is not a formality: when a million VAT refund is at stake, every day counts.

To every member of the club appoint of a personal compliance manager — not for supervision, but for consulting. This is a specialist who helps you not to be removed from the list, not to run into fines and not to fall under the automatic VAT block.

According to the recommendation of the Cabinet of Ministers, up to 25% of the employees of “white business” may be conscripted booked. In today’s realities, this is perhaps the most powerful argument in favor of participation in the list. It is not about “evasion”, but about preserving the viability of production, IT companies, and logistics chains in areas where the loss of workers threatens the economy. It sounds humane and reasonable, especially for industries like IT, logistics, medical technology or agro-export. This is a direct government policy. But the question is: how is it implemented on the ground? Will a farmer from Cherkasy and a conditional IT holding with friends in the ministries receive the same armor?

The “White List” does not yet provide access to preferential financial products, state guarantees or preferences in state procurement. And although companies from the EBA have already turned to the DPS and the Ministry of Finance with proposals to “fill” this status with real benefits, so far the reaction is as slow as the SAP reforms.

The “White Business Club” from the State Tax Service should become a symbol of the new quality of the state – honest, open, oriented on trust in transparent entrepreneurship. But behind the gloss of the facade, they have already begun appear the first risks are from unclear exclusion procedures to companies with a tarnished reputation on the “prestigious” list.

The idea looks attractive: automatic analysis, clear requirements, supervision of compliance managers. But in the absence of external control, the entire project holds on on the tax itself — its institutional capacity and goodwill. The Ministry of Finance only nods in the direction of the DPS, stating that verification is not its competence, and independent assessments are not provided for.

And only after a public outcry did the DPS adopt a safeguard — the removal of companies with Russian beneficiaries. But this move was more of a reaction to the scandal than part of an elaborate mechanism. When journalists exposed firms with political connections among “whites”, business associations only then raised the issue of criteria and transparency.

So far, public attention remains the only effective tool. It was she who revealed the weak points, forcing the authorities to respond. But even after the adjustments, many questions remain: who checks compliance with the criteria? Is there a right to appeal? How are withdrawals explained? There is no public mechanism.

Moreover, the system allows “invisibility”: a company can remain on the list, but disappear from public access, simply by submitting a corresponding application. This creates a convenient cover – formally “white”, but outside the field of criticism. This is especially dangerous in a country where the shadow economy still makes itself felt.

Thus, the tax office took on the mission of forming a list of reliable payers, but without clear rules, external supervision and appeal procedures, this initiative risks turning into a closed club for the “chosen”. No explanations, no obligations, no responsibility.

If the country really wants to support honest business, what is needed are not decorative projects, but transparent processes. Because trust is not only status, but also control. And everyone who has the right to it has the right to know by what rules the “elite” of the white list is formed. Otherwise, it will be another film from the genre of imitation reformatory.

…Next time we will consider how the “White Business Club” works in Ukraine – an initiative that should have been a step towards a transparent partnership between the state and entrepreneurs, but instead caused more questions than answers. After all, you can get on the list privately, you can be excluded without explanation, and it is impossible to appeal the decision. Business requires clear criteria, external audit and feedback, because without this the “white” status turns into a PR gesture with gray spots.

We also compare how similar systems work in the EU, the USA and South Korea: there, honesty is rewarded with real benefits, reinforced by ratings and public control. In Ukraine, there are still no statistics on the impact of the “white list” on the level of shadowing of the economy. But there are signs: the number of people willing to join is growing, in particular among small businesses. So the next conversation is about how to turn this system from a statement of intent into a true instrument of trust.

Tetyana Viktorova