Analytics

Fines are coming back: entrepreneurs on the verge of closing their business or going “underground”

ANALYSIS

In 2024, 51.5% of entrepreneurs admitted that their business in Ukraine was doing poorly. All components of the EBA Small Business Sentiment Index showed a decline. The economic situation is the worst rated: 54% of entrepreneurs consider it unfavorable, 41% – catastrophic, and only 5% – favorable. And then there’s another surprise: starting in March, individual entrepreneurs will face huge fines, which bode ill for neither business nor consumers. The situation was described in more detail to Komersant ukrainskyi by Serhiy Dorotych, head of SAVE FOP.

The fiscal pressure on entrepreneurs continues and is increasing, he said. “There have always been fines, but some of them have been moratoriumed since the beginning of the full-scale invasion. Tax control was also banned in general. Now both fines and inspections are back. This will lead to the mass closure of individual entrepreneurs. Entrepreneurs are already stopping their activities due to the unhealthy economic situation in the country, and fines, sometimes up to hundreds of thousands of hryvnias, only worsen the situation, emphasizes Serhiy Dorotych.

The fine for doing business without a sole proprietorship ranges from UAH 17,000 to UAH 85,000

According to Sergiy Dorotych, the ground has already been prepared for entrepreneurs to go into the shadows. And the final straw was reporting. For an individual entrepreneur, in fact, for a self-employed person who does not have professional knowledge in accounting and reporting, this is a disaster.

“Many people who sell, say, home-made products, often at pre-retirement and retirement age, find it difficult to understand the intricacies of reporting. They have to hire an accountant. And an accountant charges exorbitant prices for his work, and a person with minimal income is not able to pay him. As a result, they go into the “shadows”,

– says Serhiy Dorotych.

But, according to the interlocutor, it is very difficult to prove that a person is working in the “shadow” and to issue a fine. Because you need to prove the systematic nature of the violation through inspections, and the tax authorities do not do this. And even single cases go to court. In practice, fines are rarely imposed, only as a punishment. But it is used as a means of intimidation.

The fine for not registering hired workers is from UAH 80,000 to 240,000 for each employee

The State Labor Service issues this fine quite often. And there are many court cases where entrepreneurs have challenged it, and there are even decisions not in favor of entrepreneurs. In fact, a fine of 100 thousand hryvnias is a cross on entrepreneurial activity.

“If the government doesn’t need a job, then it’s going the right way. After such a fine, 98% of sole proprietorships of the first and second groups close down. In order not to pay it, they re-register their property to all their relatives,”

– explains Sergiy Dorotych.

Читайте нас у Telegram: головні новини коротко

The penalty for issuing fiscal checks of the old form is 100% of the amount specified in the document

Entrepreneurs can easily get caught with such a fine. It’s like with tax accounts, when the details can be changed at any time, and the entrepreneur will pay to the old account by inertia. And it turns out that there is an overpayment, and the new account has a shortfall.

“Penalties for such violations are a source of corruption that is deliberately created by the tax authorities in collusion with the government. And constant inspections concern fiscal checks. But there are many inspections, but few penalties, and this is where the corruption component comes in. Entrepreneurs are caught, but they don’t get a 100% fine, they get a minimal one, and the difference goes into their pockets. But today, when sole proprietors are barely surviving, markets, shops, and kiosks are closing, entrepreneurs will not pay it, they will close down,”

– believes Sergiy Dorotych.

The penalty for not having a cash register is 100% of the value of goods sold without a cash register, 150% in case of a second violation

This fine was in place, but it has been under a moratorium since the beginning of the full-scale invasion, emphasizes Sergiy Dorotych. Tax control was banned in general, and now all fines have been returned.

“This fine is purely corruption. Everything related to the cash register receipt is corruption. Now they are forcing you to use a cash register even where it is not required. And there is no choice for the entrepreneur,”

– emphasizes Sergiy Dorotych.

The fine for ignoring a tax request is UAH 8,000

This is a new fine that will be used as a tool to put pressure on business, says Sergiy Dorotych, because in today’s realities, you can ignore a tax request by accident, due to a power outage, an arrival, and so on. But this will be an excuse to get on the hook and put pressure on the entrepreneur.

The fine for violation of labor regulations ranges from UAH 8,500 to 34,000

It goes through the line of the State Labor Service and is also more corrupt, says Serhiy Dorotych.

“Instead of fighting for the survival and functioning of the economy, everything is being done to bury it and line their own pockets. The consequences will be sad: even greater “shadowing” of business and the outflow of money from the banking sector, cash circulation and illegal trade. And, as a result, the growth of crime, because there will be few jobs and a lot of weapons in the country. We can easily expect a return to the worst periods of the 90s, to the “cover-up” of business, to raider attacks, and so on. And if we talk about the quality of services provided, everything will become much worse,”

– summarizes Sergiy Dorotych.

According to forecasts, by the end of the year, we will see the closure of about 300 thousand individual entrepreneurs, while today there are about a million operating and twice as many are closed as opened every month. And next year, there will be 500-600 thousand sole proprietors across the country, no more, says Sergiy Dorotych. Real sole proprietors, not one-dayers created for money laundering.

Author: Alla Dunina