You're reading: Ukraine small business protests against new tax code (VIDEO)

About 2,000 Ukrainian traders and representatives of small businesses rallied on Thursday outside parliament in protest against a proposed new tax code which aims to raise revenue for the cash-strapped government.

The protesters complained that the new code, which could be adopted later this month, will hit their profits.

The code, pressed for by the International Monetary Fund, will oblige small businesses to pay taxes into Ukraine’s pension fund and raises the tax level on many entrepreneurs.

“We have no other way. We will hold strikes. We will block roads and railways,” said Alla, 48, a market worker from the small town of Yagodyn near Kiev.

The tax reform plans are part of the former Soviet republic’s efforts to cut its budget deficit from 5 percent of gross domestic product to avoid a debt pile-up and meet conditions of a $15 billion IMF deal.

Ukraine has withdrawn a widely criticised first draft of tax reform proposals and submitted another to parliament. This was adopted in a first reading in parliament in early October but protests and criticism could yet force another re-draft.

The code has come under fire for creating new loopholes via a range of exemptions, while being too tough on small businesses and foreign companies.

Government officials say evaded tax in Ukraine amounts to 55-60 percent of the money the government manages to collect. It forecasts budget revenue for this year of about $42 billion. To boost revenues, the government wants to lure businesses out of the shadow economy by cutting key tax rates while cracking down on what it calls common tax-evasion schemes such as inflated royalties that channel profits abroad.