Kyiv
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Experts suggest setting up center for monitoring of market prices for taxation purposes

Kyiv, February 07, 2017.

Center for monitoring of market prices for taxation purposes needs to be set up in Ukraine. The agency would be able to monitor transfer pricing, customs valuation as well as prevent respective manipulations. It will minimize the capital outflow from Ukraine through trade operations. The opinion was voiced by Dmytro Serebryansky, expert of the NGO Tax Reforms Institute at a press-briefing at Ukraine Crisis Media Center. “Transparent and efficient pricing control in course of export and import operations is needed. We suggest establishing the center for monitoring of market pricing for taxation purposes. It would provide analytical support to Ukraine’s fiscal and monetary institutions,” he said. “Abuses at customs come as the source of biggest losses for Ukraine’s state budget. It is equal to all other losses altogether,” added Myroslav Leba, expert of the Office for efficient regulation.

As per the statistics the cost of exported premium class watches and the amount corresponding to Ukraine’s formal imports is 12 times different. The core price difference is 54 per cent. Out of the 38 billion export operations in 2015, 21 billion passed through third countries. “Ukraine mostly exports agricultural goods, wood, ferrous metals etc. It makes Ukraine a raw material economy. In such conditions shadow flows are formed through the so-called “fictitious” trade – certain manipulations with the cost of exported raw materials,” Serebryansky explained.

Attracting foreign investment in Ukraine

Foreign investment is another way to attract money into the country’s economy. Experts claim it is worth using provisions on the tax saving loan when signing the double tax agreements.

It enhances increased investment into the state, as well as provides investor with opportunities to benefit more from fiscal stimulus. “Firstly, the tax saving loan can be considered in the form of economic assistance provision, investment cost decreases and the investor can thus contribute more. In contrast to the official channels of economic assistance provision it does not lead to paternalism and does not put forward additional conditions. Secondly, there’s higher respect to the sovereignty of the state that is accepting investment: it may freely use the acquired money,” explained Pavlo Selezen, expert of the NGO Tax Reforms Institute. Such a loan allows investors to save on tax payments in their presidency state.

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