16:40 15.11.2018

EBA calls on president, Rada not to support Social Policy Ministry's initiative to abolish upper limit for social security tax accrual

2 min read
EBA calls on president, Rada not to support Social Policy Ministry's initiative to abolish upper limit for social security tax accrual

The European Business Association (EBA) has criticized the bill approved by the Cabinet of Ministers on the abolition of the upper limit of the accrual of a social security tax, stressing that instead of the unshadowing effect it proposes to introduce an additional burden on bona fide taxpayers.

"The EBA appeals to the Verkhovna Rada of Ukraine and the president with the request not to support the initiative to increase burden on labor payment, which in its proposed form is a dangerous, one-sided and selective action rather than a comprehensive solution to the issue," the business association said in a press release.

According to association experts, such a proposal by the Ministry of Social Policy will not have the desired effect on the unshadowing of wages but can create a chain reaction of negative consequences. Among those is the growth of business expenses.

"The Ministry of Social Policy expects to receive an additional UAH 10 billion in a social security tax - accordingly, business expenses for mandatory payments will increase by this amount," the EBA explained in a statement.

"Outrage is caused by the fact that the lion's share of these additional revenues should be provided by taxpayers who are already legally paying wages. In fact, under the slogans of unshadowing wages, it is actually proposed to introduce additional taxation for bona fide taxpayers who do not work in the 'shadow'," the report says.

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