Ukrainian Prime Minister Arseniy Yatsenyuk has suspended the head of the tax service, Igor Bilous, and two of his deputies amid an investigation into financial corruption.
Bilous responded quickly with a comment: “I hope the beginning of the large-scale investigation … will speed up
the process of cleaning the staff (of corruption) and will become grounds for
in-depth reforming. All the departments of the fiscal service will assist the
investigation.”
In announcing the suspensions, Yatsenyuk said: “I’m not going to be OK with what I’ve read in the letters and
publicly accessible information in the mass media about the wrongdoing in the
fiscal service, customs service and tax police.” During the next two weeks, Yatsenyuk said he will meet with businesses to assess
the allegations of bribery and money laundering.
“Now, the leaders of the fiscal service have a chance to prove
their efficiency — if there is any — during the investigation,”
Yatsenyuk said . “If it will be proven, then the Cabinet will pass all
the decisions regarding the fiscal service’s staff.”
Bilous, a native of Ternopil,
has a degree in international finance from Northumbria University in the United
Kingdom. He was previously employed at UBS, a Swiss investment bank, and later
launched Altius, his own investment boutique in Kyiv.
His main accomplishments in the fiscal service, where he came in the
aftermath of the EuroMaidan Revolution, includes a reform focused on simplifying
the tax system and stimulating small and medium businesses, shifting the tax
burden to the mostly oligarch-owned big conglomerates.
The main change included an increase in the personal income tax from 17
percent to 20 percent for those who make more than $540 a month.
Meanwhile, experts admit the reform has
many flaws. It keeps the value added tax way too complicated, while also doesn’t
guarantee the reimbursement of VAT for exporters. Under the current
legislation, if a company sells goods abroad – it has to pay the VAT, but later
should get it paid back.
Moreover, Bilous offered a limited tax amnesty and reported
substantial success.
But suspicions of bribery and inaction on stopping money laundering got
Bilous suspended.
The investigation extends to the Interior Ministry and Security Service
of Ukraine, suspected of helping peole evade taxes, Yatsenyuk said.
Paying salaries in untaxed cash is common in Ukraine. The corporate
income tax stands at 18 percent, while in neighboring Poland it’s 19 percent
and the country’s economy manages to grow more than 3 percent a year.
Bilous’s predecessor, Oleksandr Klymenko, a close ally of former President
Viktor Yanukovych, is suspected of much bigger corruption and is now wanted on
criminal charges. Still, he writes columns for Forbes Ukraine, a
business monthly, and criticizes Ukraine’s cooperation with the International
Monetary Fund, which is bailing out Ukraine with a $17.5 billion loan over four
years.
After the EuroMaidan Revolution that ousted Yanukovych and his allies,
Klymenko several times contacted the Kyiv Post and asked to be interviewed, but
he eventually cancelled. He is believed to be in Russian-occupied Crimea.
Kyiv Post associate business editor Ivan Verstyuk can be reached at [email protected].
