The Coalition of Business Associations of Ukraine supports innovations in Draft Law 9260 on the administration of parcel imports

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The Ukrainian Business Council welcomes the efforts of the Ministry of Finance of Ukraine, the Tax and Customs Committee of the Verkhovna Rada of Ukraine, People’s Deputies to follow international practices in resolving the issue of non-taxable import of mail, express shipments and prevention of threats that are uncontrolled import of goods.

The European Union, the Organization for Economic Cooperation and Development (OECD), the World Customs Organization (WCO), in its recent reports, specifically emphasize the significant risks of growing cross-border e-commerce, if not monitored.

First, uncontrolled tax-free import of goods leads to a home-selling price of goods, shredding of commercial batches of goods for small mailings, understatement of customs value. As a result, financial losses for the budget of the countries.

Secondly, with a significant increase in cross-border trade and an increase in the number of packages to the tax-free limit, the customs and tax administrations of countries are not cope with administration. If the control of electronic commerce by the state is absent – critical security risks arise – prohibited articles and substances, weapons and drugs, counterfeit goods, infringe intellectual property rights.

Thirdly, the abuse and manipulation of tax-free limits when commercial batches of goods enter the country under the guise of tax-free postal and express shipments distort competition between importers and create unequal conditions for doing business. The failure to resolve the current situation will further aggravate the unequal conditions that exist in Ukraine for legal business and the shadow business. As a result, the investment attractiveness of the country is decreasing, contributions to the state budget are reduced, and more and more businesses are pushed into shadow, corrupted by the authorities and control.

Fourth, tax-free imports distort competition between domestic and foreign producers through the refund of the last VAT on exports. Such a distortion of competitive conditions creates a price advantage for foreign goods, constrains investment in production, leads to the closure of enterprises, unemployment, labor emigration, negative trade balance and leads to an increase in inflation.

All of these risks are especially relevant for Ukraine, where a series of loud arrests of commercial batches of goods under the guise of tax-free postal items testifies to the unbridled “postal” schemes. No less loud were the exposures of individual postal operators, which indicated the schemes served or were created as part of them. DFS, on the other hand, claims that it is impossible to fully control and administer postal and express shipments by the state.

In this regard, the Ukrainian Business Council welcomes the desire of the Ministry of Finance of Ukraine, the Committee on Taxation and Customs Policy of the Verkhovna Rada of Ukraine and the People’s Deputies to reduce the risks of using tax-free import schemes, which is the reverse side of the rapidly expanding international e-commerce.

We emphasize the support of the first steps towards:

– regulation of tax-free limits. According to a survey conducted by GfK, the average cost of a parcel receiving Ukrainian is 1291 UAH. Thus, the changes proposed in the bill will not have a negative effect on the ordinary recipients of postal and express shipments;

– introduction of electronic registers of postal and express shipments, which will enable supervisors to carry out risk-oriented inspections;

– Providing postal and express operators the opportunity to act as tax agents, which will greatly simplify and speed up the execution of shipments for citizens.

We also emphasize that it is important to foresee further steps to reduce the volume of non-taxable postal imports used for commercial purposes, in particular the introduction from the year 2020 of the number of non-taxable items to a few per month, which, on the one hand, will not lead to negative influence on ordinary recipients, and on the other hand, it will significantly limit the “schemes”.

The business community emphasizes that the settlement of tax-free import issues will be a significant step towards renewal of competition in the markets and improvement of the business climate as a whole; therefore, an integrated approach and the appropriate changes to the Customs Code of Ukraine and revision of the existing Acts of state bodies on regulation of the relevant sphere is important.

Source: urb.org.ua

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