Mr. Nasirov, how did SFS work last year and what prospects would you see next year?
Only for 12 months, the consolidation budget received an additional $6 billion. This was happened despite of the serious economic difficulties in the country, but we started the systemic reform of tax and customs services, launched more than 40 e-services, which greatly simplified our work and communication with our taxpayers. Now SFS processes 50 electronic documents per second, and over a million per day. We have launched updated Electronic cabinet of the taxpayer, and 4.5 million people from more than 70 countries have already successfully used it; we have introduced e-administration of fuel sale to give the order in sales business. In 2016 we processed 181.5 million tax invoices and 830,8 thousand customs declarations. The «Single Window» is also working effectively. Interregional Customs has been established; the Regional Dog Training Center of the World Customs Organization has started its work, the same as Interdepartmental Target Center and mobile teams to prevent smuggling and corruption. For the first time in independence years, Ukraine headed Intra-European Organization of Tax Administrations. This is despite of the fact we have reduced the number of staff and departments by 30%.
The fact that we managed to develop a new modern model of communication with taxpayers, to create new services to ease work and improve SFS public reputation, produces result — only for 12 months of 2016 the revenues to the budget have increased by UAH 171.4 billion. Payments to the local budgets have increased to UAH 145.8 billion, and this is serious money for development of the regions in decentralization process.
December was a record at all — we have collected more than UAH 81 billion.
By results of December we have received UAH 43 billion of tax payments and UAH 24.3 billion of customs payments and UAH 14.4 billion for the local budgets, and during 2016 targets have been exceeded.
Budget 2017 is a new challenge, but I look to the next year with confidence. Such over-budget revenues provide a serious basis for economic stabilization and growth of GDP in 2017. Maybe even to 3%. I would like more.
Have these achievements been caused by the systematic reforms of SFS, as you often say?
As I have said before, for example about «Single window», just for the last month the number of customs registrations through this service has increased several times; such service is used by 30% at some customs and this indicator is growing. This year our customs have started issuing and verification of certificates EUR-1. More than 50,000 certificates have been already issued. All electronic innovations in our customs are based also on commitments in the framework of the Association Agreement between Ukraine and the EU and recommendation the US Customs and Border Protection and the IMF.
In order to speed up control procedures at the checkpoints, eliminate duplication of practice relevant functions and, of course, minimize the human factor as a possible factor of corruption, the SFS and the Border Service of Ukraine together work on introduction of joint customs control. Currently we are preparing to launch as the experiment a simplified procedure for registration of persons and vehicles on the Belarusian-Ukrainian state border area, at the checkpoint Novi Yarylovychi — Nova Huta.
Mr. Nasirov, which know-how that you introduced had the greatest effect in the tax area?
The introduction of all modern forms of taxpayer services became the part of the results we achieved. Currently 40 electronic services have been implemented and successfully work including updated E-cabinet of the taxpayer. For instance, over 4.5 million users from more than 70 countries have registered in E-cabinet. I advise to use www.cabinet.sfs.gov.ua
We have successfully implemented the system of electronic administration of fuel to place orders and prevent corruption risks in this area. Of course, there are dissatisfied individuals among those, whom we are forced to work transparently. For instance, recently a network of gas stations BRSM has sent the protesters to the SFS building, but our position is clear: everyone should work honestly, sell high-quality fuel and pay taxes in full.
Implementation of the electronic services has caused a significant improvement of documents circulation, released time for business and simplified its work as well as our employees. 50 electronic documents are processed per second, per day we process over a million documents.
I know you have doubts about the existing simplified taxation system to avoid paying taxes.
In my opinion, the simplified system has been transformed and does not correspond to the original goals and objectives. I think it should be a form of administration and taxation of small business, not even medium business; it should relate to corporate taxes and be easy to proceedings on fixed or low interest rate. We should prevent large business to use the simplified system. So I think it should be modified and we should make it attractive for people, opening small businesses in order to be able to feed their families.
It has become an offshore zone in the country for us. We even know the foreigners from Europe and post-Soviet area, who officially legalized in Ukraine and use simplified tax avoiding double taxation.
Society dissatisfied with the submission of e-declarations of our government officials. What kind of work with e-declarants will SFS conduct in the beginning of this year?
We have analyzed in details information given in declarations and compared with available ones. If there are any discrepancies, we send it for review. As for individuals, there is a procedure similar to the procedure for legal entities. The difference is audit planned for legal entities and no planned audit for the individuals. When inspecting the e-declarant, we demand explanations of discrepancies determined. If there are any differences, we give resolution to bring the case to the appropriate law enforcement agencies.
In 2016 — 2017 you also work as the President of IOTA. What does it give to Ukraine and SFS?
Firstly, this is recognition of our successful reforms in the tax area and increase of reputation of SFS at the European level. In June 2017, 21st General Assembly of IOTA will be held in Kiev. Theme of the Assembly will be «Disruptive Trends and New Business Models: Challenges and Implications for the 21st century Tax Administration».
Generally, in tax area we did a lot last year and continue to work in this direction. As a member of OECD Global Forum on Transparency and Exchange of Information for Tax Purposes, Ukraine committed to implement international standards of transparency and automatic exchange of information. We agreed to review our internal tax environment held by their experts. Exchange of information between tax authorities in the context of globalization is our main task. Also as part of the OECD activity, our staff continued their trainings in Budapest, Vienna and Ankara.
Also I would like to focus on cooperation with the U.S. Embassy in Ukraine — among other things I mean work on the implementation of the 7th stage of the project «Technical assistance to strengthen Ukraine’s export control system and countering the proliferation of weapons of mass destruction». The main instrument of this project was purchase and delivery of equipment to improve our capacity for such control. American experts from the US Treasury Department during the year conducted seminars to exchange experience. They applied to support of large taxpayers, audit, transfer pricing and international taxation, corruption, development of IT projects.
We actively worked with the IMF in the framework of two missions of IMF experts, studied problems of tax administration, and two missions of customs issues. Short-term mission of EU experts worked with our specialists on institutional reform, harmonization of tax bases and other issues.
How has SFS worked with international partners, first of all with the EU, in the past year?
Last year we were actively working on fulfillment of commitments, undertaken by Ukraine in the field of European integration, and we have achieved deeper cooperation with international organizations, tax and customs authorities of foreign countries including international financial and technical support. It means implementation of the European experience in our work and implementation of European laws.
Experts of the State Fiscal Service of Ukraine together with colleagues from Germany, Poland and Lithuania have started a two-year joint project TWINNING to develop integrated border management. As a part of the EU technical support on border management using the TAIEX instrument, EU specialists held training for customs officers of SFS to exchange European experience with them.
We were also actively working with the mission of the European Commission led by Mr. Andrew Tesoriere, who helped with development of the border structure. It is necessary to mention the project «EVAL 2016» of monitoring and evaluation of customs control in the Ukrainian-Moldovan border, and cooperation with the Director-General of the Directorate-General of Taxation and Customs Union (TAXUD) Mr. Stephen Quest and the Director-General of the European Anti-Fraud Office (OLAF) Mr. Giovanni Kessler. We also work on implementation of the Ukraine–European Union Association Agreement.
And what important steps have been taken in the customs area?
At the initiative of the Ukrainian side, important step to develop customs area was signing of the Agreement between the Government of Ukraine and the Government of the United States on mutual support between customs administrations. Together with the U. S. Customs and Border Protection Commissioner R. Gil Kerlikowske I have signed this Agreement. The document proved strengthening of U.S.-Ukraine cooperation toward border security and exchange of customs information.
In cooperation with the World Customs Organization, we have established the Regional Dog Training Centre in Khmelnytskyi. Dogs from this Center provide invaluable help to the customs staff to detect smuggled goods, such as cigarettes, weapons, drugs and so on.
It is difficult to focus on all aspects of our activities in this interview. Here development of the contractual base and strengthening of contacts with representative offices in Ukraine. We are ready to use successful experience of our foreign partners and support to complete radical reform of fiscal and customs administration and accelerate Ukraine’s integration into the team of developed countries.
The latest alarming information for our citizens — the risks associated with nationalization of Privatbank. What can you say about it?
As for SFS, I can reassure our taxpayers. If delay of revenue in the budget takes place because of reorganization of Privatbank, we will not be imposing fines on taxpayers. According to the Tax Code, the fines on will be compensated by the banking structure. The worst for the economy would be a possible financial collapse of the bank.
In this sense, does increase of the minimum wage substantially stimulate Ukrainian economy?
No doubt. We hope for a decent attitude of business leaders, who have a responsible approach to the cancellation of paying salaries in envelopes, voluntarily withdraw from the shadows. At the beginning of 2016 I told about required increase of the minimum wage to UAH 5000 with prospect of further output by 7500. We have calculated the economic benefit to give new impulse to development of the state and significantly increase revenue. I hope increase of the minimum wage from January will confirm our serious potential. We have made a step toward Business and reduced Single Tax. Therefore it is necessary to become responsible, pay white wages, despite of the fact that some dishonest citizens try to pay part of cash to receive the subsidy. On the other hand, the company will not need to pull off financial fraud in order to draw money for additional cash payments.
Recently, at the session of the Council on investment promotion and business, the audience has praised your work in 2016. The President of the Association of Taxpayers Grigol Katamadze said that despite of economic and political problems in Ukraine and sometimes a bad attitude to SFS by a number of politicians, your work is impressive.
We try to do everything to make Ukraine more attractive for investments. All our reforms, including fight against corruption, aimed at realizing of this goal. We are grateful to our colleagues from NGOs, trade missions of foreign states, who try to help us to become better, who are concerned about the fortune of Ukraine and wish to improve business climate in Ukraine, and develop the Ukrainian economy. To understand situation in economic sectors better, we need Ukrainian Doing Business; we should analyze all areas and find out improvements and negative results.
We should change tax legislation, excluding changes for changes. Fiscal policy should be an effective mechanism strategically developed. Changes can be made only by joint efforts. Yes, there will be slightly different approaches on the industries, but I believe 80% of all developments can be coordinated together.
We submitted our amendments to the Tax Code. A significant percentage of them have not been taken into account by the Ministry of Finance and have not been submitted to the Parliament. I believe that such a budget-forming structure as SFS cannot be deprived of legislative initiative.
Instead, a group of deputies have developed a draft resolution of the Verkhovna Rada to recognize your work as unsatisfactory result. Fight for your seat always exacerbated during a backstage trades before approving next Budget?
The result of our work is very significant increase in revenues to budgets of all levels in 2016. Res ipsa loquitur. I think we are stretched to the limit, in this situation, although I see reserves and look to the future with confidence. Cooperation and understanding with business achieved this year encourages.
The main thing is responsibility of everyone including our critics who lobby someone’s political or economic interests.