“Someone keeps money under the mattress, someone keeps it abroad. We want to return the money to the economy. So that people want to invest their money in their country,” said Danylo Getmantsev, head of the Verkhovna Rada's tax policy committee.
MPs adopted Zelensky's "limited proposal" according to which one cannot be held accountable before the law for earnings in envelopes. In the period from September 1, 2021 to September 1, 2022, it is enough just to draw up a special declaration, give a certain percentage of your property - much less than the prescribed 19.5% (contribution to the Pension Fund and military tax) - and you can sleep peacefully.
This is in theory. In practice, the new law may have irreversible consequences both for those who decide to legalize hryvnia and dollars "under the mattress" and for those who will not. At the same time, there is a high risk that the law will play into the hands of corrupt officials and other criminals.
Why tax amnesty is good?
First of all, the amnesty may be of interest to you if you have received a salary "in an envelope" for a long time and plan to make large purchases from your bank account. For example, you want to buy an apartment or a car. A financial institution, in view of the implemented monitoring, may ask you where the firewood comes from. If you cannot confirm the origin of the money, there is a high risk that the transaction will be blocked. It is not at all necessary that you will face difficulties now, but in the future, financial monitoring is only promised to tighten.
If you pay a certain percentage of the amount withdrawn from taxation, the assets will be considered legal and no one will ask about their sources. However, there is a nuance. If you put your money under the mattress, you won't be able to legalize cash. It will need to be deposited into a bank account in the national currency. As a result, problems with financial monitoring may arise: the sources of your earnings can be checked.
The proposal from Zelensky could theoretically be interesting not only to those who have not only bank accounts, but also contributions to credit unions, loans that they gave to other individuals, securities, banking metals, electronic money, shares in the property of legal entities, property rights, such as real estate. It is assumed that everything that is located in Ukraine will be subject to 5% tax during the grace period. There is no need to pay for some assets:
"Whitening" a bank account, real estate above the specified limits, expensive cars can be especially important for someone who is going to become an official in the near future and file a tax return.
The very fact that there is a list of privileged property, as it were, proves that Zelensky wants to fill the budget not at the expense of ordinary Ukrainians, but primarily at the expense of private entrepreneurs and large business owners. True, it is not clear what to do if you have several apartments or cars that meet these requirements. Which of them will be legalized is unknown. It is also unclear whether we are talking about one site and a vehicle or several. How, in fact, and why the legislators decided to choose exactly such amounts of assets.
In the "risk zone" are deposits, the amount of which exceeds 15,000 USD. There is a risk that citizens, whose finances exceed this amount, will try to take the "difference" from the financial institution. Or underestimate the amounts in the declarations, given that the officials promised not to check the correctness of the indicated amounts.
Cost of whitening assets
Both the national currency and foreign currency on accounts in state banks will be subject to a 5% fee. That is, for a deposit of 16,000 USD (exceeding the limit), which you replenished with a "black" salary, you will have to pay 800 USD.
If you do not have such free funds, you can pay the fee in installments. The rate will be 6% (the first payment - within 30 days from the date of filing the declaration, the second - until November 1, 2023, the third - on November 1, 2024). The overpayment in the case of the above deposit will amount to 170 USD.
It will not be possible to legalize unsanctioned assets or assets on the territory of the aggressor state. But for deposits in other foreign accounts, the fee will be 9%. As, however, for any other property abroad. The same deposit in dollars (16.7 thousand) will cost 1,300 USD collection. An installment plan for three years is possible, but then you will have to pay not 9%, but 11.5%.
However, if you hurry up and legalize foreign assets before March 1, 2022, you can count on a 2% discount (you can save 335 USD for the specified deposit in foreign currency).
Assuming that a number of citizens who have "illegal" savings in cash will decide to put their money in banks, the state has provided for them the opportunity to buy "preferential" annual government bonds (domestic government bonds). The fee for bonds is half that for a bank account. In this case, you can even come out "in plus", because, on the one hand, you will pay 2.5% tax on the purchase of bonds, on the other - the annual yield of bonds is about 10-11%.
For the same 16 million USD with this scheme, you can earn about 1,600 USD per year (excluding operating expenses). True, you need to understand that not everything is so cloudless, and in the event of a serious crisis in the country, you can wait for a refund for years.
These bonds should be purchased from September 1, 2021, to August 31, 2022, but before the filing date. There is also an installment plan for collection - if you use it, you will have to pay 3%.
What if you don't use the amnesty?
If you have not exercised your right to amnesty assets (other than privileged ones), the state will consider that you have reported their absence. In the future, if it is proven that you have evaded taxes, you may be liable before the law. It is planned that the state will further strengthen its tax control. Steps are already being taken for this: a new body will soon start working to investigate tax crimes - the Bureau of Economic Security.
But what if you honestly paid taxes all your life and saved up, for example, for an apartment of 125 square meters? Could the officials force you to pay taxes again?
The main scientific and export department of the Verkhovna Rada in its conclusion indicates:
"One gets the impression that in the case of an unused individual's right to submit a one-time (special) declaration, all assets without exception in excess of the established volumes that are in bank accounts, but also in state registers (in terms of real estate and land plots), will be considered illegal and etc. (which obviously do not require any additional confirmation), which is unacceptable."
However, there is a nuance that should sweeten the pill at least a little. Everything that you bought before 2018 is already a priori legal, because there is a limitation – three years of limitation on unpaid taxes. Also, do not forget about the presumption of innocence. However, this is, of course, little consolation.
It is important to understand that, ideally, for the authorities, over time, absolutely all Ukrainians will declare their income and expenses. The initiative for universal declaration has already flashed within the framework of the "year of turbo mode" of power, and the tax amnesty is the first step towards it.
Consequences of avoiding responsibility and remain anonymous?
The trick of the reform is that if you are afraid of prosecution under the law from tax evasion, then you can submit a special declaration anonymously - through a notary as your authorized representative. The supervisory authorities are prohibited from refusing to accept the declaration, demanding the provision of documents.
But there are several "buts". Anonymity itself is a big question, since a notary is obliged to fully identify his client. He will still keep your documents and the original of the declaration signed by you. In addition, the notary is responsible for financial monitoring. In countering money laundering, he is simply obliged to report to the tax office on the amount of citizens' income and taxes paid by them. Moreover, if he violates these obligations, he may be revoked from his license.
The main scientific and expert department in its conclusion to the law wrote about the risks of mediation of notaries. Experts believe that innovations can negatively affect the quality of their services.
In addition, it is indicated that the information in the declaration can still be disclosed "in cases directly provided for by law or by a court decision." The list of such specific cases is not specified, and in fact nothing prevents such cases from being foreseen later.
What about corrupt officials?
In theory, there is practically no incentive for participants in large fraudulent schemes to use the tax amnesty. The law is written in such a way that even assets that have already been bleached can be confiscated if it is found illegal to acquire them (other than tax evasion). At the same time, the funds paid during the tax amnesty period will not be returned.
But it is almost impossible to control whether the assets were actually obtained as a result of the commission of an act that has signs of crime.
The main scientific and expert department in its conclusion also indicates that the tax amnesty can become "a way to legalize the so-called" dirty "money. Relatively speaking, if the killer sold a person for organs and then decided to “bleach” these funds, it is almost impossible to prove that he “lit up” the sums not saved over the years, paid to him by the employer in envelopes.
This is, in fact, one of the reasons why the IMF is categorically negative about any tax amnesties. With a high degree of probability, we will also face problems with the fund, because Ukraine has pledged not to carry out tax amnesties with a Memorandum of Cooperation. In addition, our country is implementing the FATF anti-money laundering standards.
Against the background of the abolition of responsibility for illegal enrichment, legalized money can be laundered through relatives or friends. As for officials and those who have previously been in the civil service, it is assumed that neither they nor their relatives will be able to directly benefit from the tax amnesty. However, this is actually just a postscript, because there is a very scandalous clause about anonymity.
Returning to the issue of notaries' duties related to financial monitoring, there are high risks that they will not be informed about the "necessary" people, which cannot be said, for example, about representatives of medium-sized businesses - if necessary, it is quite possible to squeeze all the juices out of them.
Is it worth the candle?
Will the increased control over the spending of citizens result in at least a partial victory over the "shadow" and bonuses for the budget? If we analyze the international experience of tax amnesties, the scale of "whitening", the income will be modest. In Russia, in 2018, for example, about 4% of funds from offshore companies were legalized. In Italy, it was possible to fill the budget with taxes by 4 billion euros, in Argentina - by 5.2 billion dollars. Ukrainian lawmakers did not roll out their lips and planned to receive about $ 1 billion in taxes as a result of the amnesty.
Since there will be little reason for ordinary Ukrainians to "bleach" income, Getmantsev hopes that the system will work on the wave of trust in President Zelensky – he himself stated this. That is why the team is in a hurry.
Until September, it is necessary not only to have time to develop a one-time special declaration form, by-laws and new algorithms for the administration of data collection. It is also necessary to let people understand the system and, ideally, to give them the opportunity to obtain all the necessary supporting documents. And this is in a period of uncertainty due to the pandemic.
Financial analyst Oleksiy Kushch believes that the initiative should be postponed. And even with the correct observance of the transition period and minimization of all the above risks for Ukrainians, there will be no "exhaust" until the real reasons for withdrawing money into the "shadow" are corrected. In Ukraine, this is a high level of fiscal burden, monopolization.