Capital Amnesty. Results

So, on March 1, the tax amnesty ended in Ukraine, which, in fact, marks the end of the capital amnesty. Before drawing some conclusions, let us look at some numbers:

1. According to Danylo Hetmantsev, Chairman of the Verkhovna Rada Committee on Finance, Tax and Customs Policy, over USD 45 billion of capital are “shadow” in Ukraine. About 30 billion were assessed as those that could be amnestied.
2. As of March 1, 2023, approximately USD 150 million were declared through the tax amnesty. 
3. Less than 1,000 people took advantage of the tax amnesty.
4. UAH 547 million of state tax have been allocated to the country’s budget. UAH 326 million have been actually paid.

There are many reasons for this result, from subjective to objective ones; there is a lot of analytics on this matter from tax experts, professional consultants, financial columnists, etc.

Three most significant of them may be singled out:

1. Distrust of entrepreneurs in state control institutions, first of all, tax authorities and courts, which are often characterized by bias, corruption, and unprofessionalism.
2. Legalization of money provided for the crediting of amnesty funds by depositing them in special bank accounts. Banks, in turn, are guided not only by the norms of Ukrainian legislation, but also by internal rules of financial monitoring. Most banks were not interested in having a priori “grey” money on their accounts, because the amnesty does not whitewash the history of their origin.
3. War. The tax amnesty provided for the payment of a state tax of 4% on amnesty capital. During hostilities, the same thing can be done for 2% under the current legislation.

Some conclusions:

1. The expiration of the tax amnesty actually affects even those who have never heard of it. The corresponding Law states that all Ukrainians who do not submit a one-time declaration as part of the tax amnesty are actually declaring to the state that they do not have any property or assets received without paying taxes. According to Danylo Hetmantsev, “There is an important moment. Those who took advantage of it did a good job, and for those who did not take advantage of it, there will be no such chance again. That is it. We gave people the opportunity to draw a line under their past.”
2. The information and documents provided for the tax amnesty procedure are processed by the State Financial Monitoring Service. In accordance with the legislation, it reports to the Bureau of Economic Security about the discovered suspicious facts. The BEB already conducts relevant criminal investigations and prosecutes in case of violation of the law. In the Criminal Code of Ukraine, it is easy to find relevant articles on illegal acquisition of property or failure to pay particularly large amounts of taxes on such property.

Volodymyr Harkusha,

Managing Partner of K.A.C. Group

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