Crisis of confidence in the State Tax Service: how the tax authority is trying to restart relations with business
28 April 21:20
The head of the State Tax Service, Ruslan Kravchenko, has announced a crisis of confidence on the part of Ukrainian business. The official said this in an interview with Ekonomichna Pravda, [Komersant] reports.
Kravchenko admitted that Ukrainian business sees the tax service not as a partner but as an enemy. The reasons are not only in individual incidents of blocking tax invoices or classifying companies as risky, but in a systemic crisis within the service itself. In fact, until recently, the Tax Service resembled a medieval feudal mosaic: each department was a separate principality, each region an independent fortress without communication with the center.
Meetings with business, which Kravchenko is now actively conducting, are not just a PR campaign. It is an attempt to restore the broken bridge arteries between the fiscal authority and the real economy. As the head of the service himself admits, in some regions, businesses have not seen the head of the State Tax Service for five years. This is tantamount to a bank not seeing its customers for half of the standard mortgage term.
“We are holding meetings with business. In Dnipro, for example, the head of the Tax Service has not been seen for five years. In other regions, the situation is similar. Our last meeting was with associations of honey and nut producers. It was not a very pleasant conversation, because the business feels that we are enemies. And we are not enemies,” Kravchenko said.
The strategic goal of Kravchenko’s reform, which he also discussed with media journalists, is not to change individual procedures, but to “rewire” the very logic of interaction between the state and business. To do this, the State Tax Service is setting up consulting centers where companies will be explained the reasons for their risky status – not through fines and sanctions, but through dialogue and support.
The head of the State Tax Service also said that his agency is trying to simultaneously reduce the number of blocked invoices to 0.2% (against 0.76% in 2024) and expand the list of criteria for unconditional registration of documents. This seems to be an attempt to turn the tax system from a controller into a partner: to reduce friction where “white” business suffered along with shadowy players.
But there is a flip side to this medal: Kravchenko openly admits that if new “windows of opportunity” for tax evasion are used, the State Tax Service, together with the Bureau of Economic Security, will act harshly. In fact, we are talking about a transition from total control to pointed analytical supervision, similar to practices in OECD countries.
Why Ukraine has a low level of trust in fiscal authorities
The issue of trust is a central element of the National Revenue Strategy until 2030, developed by the Ministry of Finance of Ukraine at the end of 2023. Minister of Finance Sergii Marchenko has repeatedly emphasized that no reforms will be implemented without increasing trust in the fiscal authorities. The document even includes a special section 4.2.1(b) – “Increasing public confidence and creating a positive image of the State Tax Service” – which defines specific measures and mechanisms for evaluating their effectiveness.
However, the basis for the development of this strategy turned out to be questionable. The fiscal authorities were guided by the data of the 2022 Global Survey, which showed that 64-75% of the population and business trust the STS. However, a deeper analysis reveals that the sample was skewed: mostly citizens who interacted with the Tax Service through electronic services were interviewed, rather than entrepreneurs with real experience of dealing with fiscal inspectors. The questions in this survey mainly concerned the availability of online services and the politeness of employees.
When the World Bank conducted a new survey in 2024, the results were quite different: only 7.8% of respondents agreed that fiscal authorities acted fairly, while almost half expressed distrust. The InfoSapience survey for CASE Ukraine additionally showed that more than half of entrepreneurs believe that the Tax Service is ineffective in the fight against tax evasion, and almost one in five entrepreneurs is convinced of systemic abuse by fiscal authorities.
Thus, the basis of the National Strategy was based on illusions about a high level of trust that cannot withstand the reality. The current state of affairs shows that business considers the Tax Service to be an obstacle rather than a partner.
The Ministry of Finance now faces a choice: either to stubbornly hold on to an idealized version of reality and risk the failure of the strategy, or to recognize the real mood of business and the public and revise the National Strategy, adapting it to the challenges of today.
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