People's deputies of Ukraine

Dear MPs!

Members of the Ukrainian Business Council, which includes 110 business associations of various sectors of the economy, analyzeddraft law No. 5420 regarding the criminalization of smuggling and came to a conclusion, that in the proposed to 2 reading the editorial, this project poses significant threats to law-abiding business, since its provisions are formulated in this way, whatcontain significant corruption risks, and also pose a threat to the activity of primarily legal business and in no way contribute to solving the problem of shadow imports.

First of all, it should be emphasized, that the threshold of criminal liability under Article 201-3 of the draft law is unreasonably low. In particular, criminal liability is proposed in case of illegal movement of goods across the customs border in the amount of, with a share of more than 1,342 million. Instead, for the qualification of a criminal offense according to the article 212 of the Criminal Code of Ukraine (CCU) "Tax evasion", the threshold of criminal liability for tax evasion (which are customs payments) is 4,026 million. 

Since such changes relate specifically to responsibility for economic crimes and public danger consists precisely in non-payment of taxes and other payments, then it is advisable to be guided by those similar to the content of the article 212 KKU criteria for determining the threshold of criminal responsibility. More, the issue of the customs value of goods is often the subject of a dispute between the declarant and the customs authority, and therefore cannot act as a threshold for criminal liability.

Significant risks for honest business are also seen in the proposed version of the Notes to Art. 201 CCU, which refers to smuggling, including the submission of documents to the customs authority as a basis for the movement of goods, containing false information about the name of the goods, their weight or quantity, country of origin, sender or recipient, the number of cargo spaces, their markings and numbers, false information, necessary to determine the product code according to the Ukrainian classification of goods of foreign economic activity and its customs value, which led or could lead to an unlawful exemption from payment of customs payments or a reduction in their amount. In practice, when declaring goods, the customs authority and the declarant often have disputes regarding the determination of the customs value, product code, country of origin, scales, etc. More, proposed revision of the article 201-3 does not imply necessityproving intent to commit a criminal offense.

The full text of the statement of the Ukrainian Business Council can be found at the link: https://urb.org.ua/zakonoproєkt-pro-kriminalizacziyu-kontrabandi-nese-zagrozi-dlya-zakonosluhnyanogo-biznesu-zayava/

To the Prime Minister of Ukraine

Minister of Economy of Ukraine

Minister of Finance of Ukraine

Heads of the Committee on Finance of the Verkhovna Rada of Ukraine, tax and customs policy

Heads of the Committee of the Verkhovna Rada of Ukraine on Economic Development

Members of the Ukrainian Business Council Coalition, which includes 105 business associations of various sectors of the economy, express their respect to you and address you as follows:

Recently published conclusions investigation of the Business Ombudsman Council regarding the operation of the SMKOR system. The key conclusions of the Council are::

• IN 4 quarters 2022 Year of blocking touched 65 tis TOV, what is 40,4% from active VAT payers.
• Time spent on unlocking PN is more 12 hours of time of the accountant/director.
• During the operation of the system, it was eliminated 2/3 gray schemes, but now the system is not working optimally - there is more manual mode, broader and less clear criteria, the mass of blockages, improper justification of DPS decisions.
• Close 95% court cases regarding blockages - taxpayers will win.

Based on the results of the investigation, the Council of the Business Ombudsman made the following proposals, to fix the system:

• Improve risk orientation, clearer criteria, more automation
• Make a real analysis of the regulatory impact of the system, real calculations (additional revenues to the state/business expenses)
• Build the system's fuses - the system must first warn the payer
• Allow admins to challenge tables
• Provide information on the risks of counterparties, remove risk "retrospectively"
• Publish more statistics on key system indicators

Critical situation with long queues, which was formed at the border crossings of the Ukrainian-Polish border at the beginning of September this year, has improved significantly.

This was reported by the president of the Association “Ukrkondprom” Oleksandr Baldyniuk.

“As of today, queues have been reduced by almost 10 times, in particular, in the same Yagodina - to 250 auto, and the idle time of trucks at the border is tripled, from ten to three or four days. It's more, than the Ukrainian exporter would like,  but progress is evident”, – noted the head of Ukrkondprom.

According to him, the cause of traffic jams was the low capacity of border crossings, caused by cargo inspection procedures on the Polish side with the growing cargo flow on the Ukrainian side in wartime conditions.

He paid attention, what “During the eight months of Russia's military aggression, truck carriers became the main transport pillar of the Ukrainian economy: 14% export and 53% imports were transported in September 2022 of the year by motor vehicle”. 

According to the head of Ukrkondprom, the crisis was significantly reduced thanks to the joint efforts of the relevant Ukrainian state bodies within the project “Open border”.

The full text of the press conference can be found at the link: https://interfax.com.ua/news/press-release/863845.html