"Someone has 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.
Zelensky has developed a "limited offer" according to which one cannot be liable before the law for earnings in envelopes. It is enough just to draw up a special declaration, give a certain percentage of your property - much less than the required 19.5% (contribution to the Pension Fund and military tax) - and you can sleep peacefully.
But such a seemingly tempting initiative can turn into irreversible consequences both for those who decide to legalize hryvnia and dollars "in socks" and for those who will not. At the same time, there is a high risk that it would play into the hands of corrupt officials and other criminals.
Why do we need a tax amnesty?
Let's get around the tirades about social and civic responsibility and get straight to the point. 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 long term financial monitoring is only promised to be toughened up.
If you pay 5% of the amount withdrawn from taxation, the assets will be considered legal and no one will ask about their sources.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 “in socks” you will not be able to legalize cash by paying the same 5%. It will need to be deposited into a bank account in the national currency. As a result, there may be problems with financial monitoring, which can check the sources of your earnings.
If you have currency, then it is not yet completely clear whether it can still be brought to banks in other countries and legalized. In one part of the bill, it is stated that only state banks are suitable for amnesty, in the other - that funds can be deposited in foreign institutions, just the rate of the collection will be higher - 9%. As, however, for any other property abroad.
The proposal from Zelensky could theoretically be interesting to those who have not only bank accounts, but also contributions to credit unions, loans that they gave to other individuals, securities, bank metals, electronic money, shares in the property of legal entities, property rights, for example, real estate. It is assumed that everything located in Ukraine will be subject to 5% tax.
To increase the motivation of citizens to take advantage of the tax amnesty, they are offered not to put "illegal" money in the bank, but to buy government bonds (domestic government bonds) for them. 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%.
If you have 40,000 USD, with this scheme you can earn about UAH 80 thousand per year. 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.
What if you don't use the amnesty?
If you have not exercised your right to declare assets, 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, which will investigate tax crimes - the Bureau of Economic Security.
But some assets do not need to be reported. They are called "preferential" in the initiative.
It is important to understand that, ideally, for the authorities, over time, absolutely all Ukrainians will declare their income and expenses. The initiative on 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.
How to avoid 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. It is also assumed that government agencies are prohibited from disclosing information.
But there are several "buts" at once. Anonymity itself is a big question since the 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 such obligations, he may be revoked from his license.
Returning to the question of 18%, this is one of the most controversial norms. With the initiative, the legislator not only significantly increases the fines for violating the procedure for filing the income declaration, but also provided for the possibility of increasing the tax collection. You will have to pay more if, for example, you inform your friend about the loan and cannot confirm this fact with a notary.
However, the legislators emphasize that the correctness of the value of the declared assets indicated by you will not be checked. Most likely, this was done so that you could not be obliged to pay 18% of the apartment, the cost of which may be recognized as understated. And also - so that citizens do not have to turn to auditors en masse. However, most likely, this will still have to be done to confirm a number of other assets, for example, cryptocurrencies, art, and antiques, jewelry.
What about corrupt officials?
Ordinary citizens are unlikely to be sufficiently motivated to legalize their income, in contrast to the hard-core tax evaders and corrupt officials.
First, based on the draft law, even if a criminal case on tax evasion has already been opened, it will be closed. Secondly, although it is indicated that the objects of declaration cannot be assets obtained as a result of an act that has signs of crime (except for tax evasion), it is almost impossible to control this.
The main scientific and expert department also points out 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. If the bill is adopted in the second reading, 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 - it is quite possible to squeeze all the juices out of them, if necessary.
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. If the bill is voted on in the second reading, the amnesty will start working in June and will work for exactly one year - until June 2022. However, such a rush can turn into problems.
Until June, it is necessary not only to have time to develop a form for a one-time special declaration, 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.