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Why Western investors will never put their money in the Ukrainian economy?

Author : Ilya Kenigstein

Why is Ukraine the poorest country in Europe? Because even the richest Ukrainians manage to be out of country's economic relations
11:15, 23 May 2018

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e15initiative.org

When will Western investors begin to invest in the Ukrainian economymassively, creating qualifying assets and new jobs? Never.

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Because they are not stupid. Foreign businessmen do not want to learn all the peculiarities of the intricacies of our taxation, and, in any case, become a violator of absolutely illogical tax legislation. Even patriots would not do it. By the way, first of all, the patriots.

How can you explain to the foreign investor that a part of invested money can become taxed even before a project starts to generate revenues and profits? We are talking about the notorious tax on profits. For the past three years, numerous people have been talking about reforming this issue. The profit tax, in a form it exists now, is an absolute misunderstanding, covered by a layer of cynicism of government exclamations about the country's investment attractiveness.

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The idea of reforming the existing income tax arose on the basis of its inefficiency. It does not create incentives for investment and is complicated in administration; a business can easily shy away from paying it. Therefore, at the end of 2016, as an alternative to the National Council of Reforms, the option of replacing the income tax with the tax on the withdrawn capital was proposed, by analogy with what was introduced in Estonia. It helped Estonia to increase its own GDP by three times in five years. The tax on the withdrawn capital is the same profit tax, only without elements of Soviet corruption. Everyone agrees with the new bill. But in practice, President’s Administration, the Cabinet, the Finance Ministry, and the parliament have been simulating support for the third year, doing everything to slow down its adoption. Winking at their reflection in the mirror above the toilet.

Related: Why Ukraine didn't become investment Mecca?

Why is Ukraine the poorest country in Europe? Because even the richest Ukrainians manage to be out of the economic relations in the country. They do not understand them, they do not believe in them, they do not practice them. They continue to follow tribal concepts, mysticism, currency totems, and populist appeals to Western investors. Who is invited to invest billions of dollars in economic relations, which do not exist?

Related: What can cause inflow of foreign direct investment to Ukraine?

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