The recently promulgated draft law No. 11416, which provides for a 30% tax increase for the jewellery sector, has caused a wave of concern among industry representatives. Valeria Guzema, a Ukrainian jewellery entrepreneur, jewellery designer, and owner of the Guzema Jewelry brand, expressed serious concerns about the impact of this bill on the legal jewellery business in Ukraine in a post on social media, Komersant ukrainskyi
reports
The draft law, which has not yet been submitted to a scheduled meeting of the Verkhovna Rada, proposes a tax increase to finance military spending. In particular, for the jewellery sector, it is proposed to increase taxes by up to 30%.
Guzema stressed that such a tax increase could be fatal for the jewellery industry. She foresees that small jewellery brands may be forced to move into the shadow sector, which will lead to an increase in cash payments and, as a result, a decrease in the transparency of the industry.
“In my opinion, for the jewellery industry, this increase is the death of the legal jewellery business in Ukraine. I am sure that small jewellery brands will be forced to go into the shadow economy and cash turnover will increase. For larger companies, such as us, it will mean a significant reduction in sales and the inability to develop. This will result in a drop in production volumes, closure of boutiques, staff reductions and a decrease in tax revenues to the budget,” Guzema said.
Valeria assumed that this would also lead to a reduction in the spot aid to the Armed Forces provided by her brand.
In addition, Guzema draws attention to the additional pressure put on jewellery manufacturers by the NBU Resolution No. 18 of 24.02.2022, which prohibits the sale of precious metals to legal entities and companies. This resolution came into force at the end of 2023, which further complicates the situation in the jewellery industry.
Guzema emphasises the importance of jewellery as a cultural heritage for future generations. She recalls the historical context when Ukrainians exchanged gold jewellery for food during the Soviet famine, which led to the loss of a significant part of the cultural heritage. Today, when the jewellery industry in Ukraine is going through a period of development, new legislative initiatives may put it at risk of destruction.
Valeriia Guzema calls for a review and amendment of the draft law No. 11416, taking into account the interests of entrepreneurs who play a key role in the development of the country’s economy.
“It is very unfortunate that now, during the development of the Ukrainian jewellery industry, it can be destroyed again. Therefore, I urge you to review and amend this draft law, taking into account the interests of entrepreneurs who directly affect the interests of our country’s economy,” Valeria concluded.
As a reminder, the Cabinet of Ministers of Ukraine is planning tax changes. According to a published document, the government plans to raise the military tax, which currently stands at 1.5%, to 5%.
In a commentary to Kommersant Ukrainian , investment banker Sergey Fursa said that such a step was forced, as military operations continue in the country. In his opinion, a better solution would probably be to raise VAT or excise taxes, but the most important thing is to fill the budget.