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Just sixty percent of the plan was successfully completed by the State Customs Service in 2022. Some deputies have referred to it as a failure, stating that the body is the weakest link.
The State Customs Service is the most vulnerable part of the chain
Daniil Getmantsev, chairman of the Tax Committee, was critical of the State Customs Service after finding that the organization had only met the objective by a percentage of 56.9%. In other words, the amount of money received by the state was less than 227.5 billion hryvnias.
The People’s Deputy is in agreement that the three-month suspension of customs payments contributed to what is often referred to as the failure of customs in 2022. In the same breath, he makes the observation that the circumstances have not much improved since they went back to working on them in July.
Daniil Getmantsev, Head of the Verkhovna Rada’s Committee on Finance, Tax, and Customs Policy
“The executives of the company are unable to repair the structural issues that have been afflicting the service for a considerable amount of time, and this is having an influence on the situation. It should come as no surprise that customs is the weakest spot among all of the financial authorities. Named after the BEB.”
Yaroslav Zheleznyak did not remain silent and offered his commentary on the matter as well. The people’s deputy mentioned that the work of the body was impacted by a lot of things, such as the war, the loss of transit, the advantages from customs, and so on; nonetheless, he does not feel that he is responsible for 43% of the shortfall in finances that resulted from the plan.
Zheleznyak points out that the plan calls for 44 billion a month, which the body has not even come close to fulfilling in a single month this year.
It should be emphasized that devaluation and inflation had a significant impact in favor of customs payments; nevertheless, the fact that this was not an obvious consequence should not be overlooked.
In July, nearly all of the customs advantages were removed, which, in his judgment, did not have any impact on the total amount of income brought in by the government.
“Not a complete waste of time.”
Expert Tatyana Ostrikova doesn’t think it’s fair to call it a “direct failure” because the plan wasn’t met because of the work of the customs officials as much as because of the general drop in imports, the state of the economy, the benefits given, and the decrease in the VAT rate on fuel. Yet she does acknowledge the possibility of “gains in efficiency.”
Ostrikova offers to look at what was written in the budget and how much money the government lost because of benefits and other things.
In terms of import VAT, import excise, and taxes on international trade, the pre-war version of the state budget for 2022 was 519 billion UAH instead of 528 billion UAH.
Tatyana Ostrikova
He or she is a member of Altbank JSC’s board of directors.
That is, when a full-scale war began, the customs indicator from before the war did not go down; instead, it went up. I think that the drop in the VAT rate on fuel and oil products had a big effect on the drop in customs duties as well.
What will happen if the VAT rate on fuel is cut?
During the first nine months of 2022, they will cost $6.1 billion to bring in. This is 72% more than in the first nine months of 2021.
With a VAT rate of 20%, this amount would bring in $1.2 billion in tax revenue for the government. At a rate of 7%, that’s only $427 million.
That is, because of this benefit, customs lost 793 million dollars, which is equal to 25 billion hryvnias.
Customs Service of the State: Holidays
“No one asked for the so-called “customs holidays,” which came out of nowhere and messed up business from April to June 2022″ — considers Ostrikov.
Due to customs holidays, $11.6 billion worth of goods were brought in over three months. Before the war, the average amount of tax on imports was $0.26 per $1 of imports.
That is, the officials could get 3 billion dollars, or 86 billion hryvnias, from the 11.6 billion dollars.
“All of these things led to a “deficit” of UAH 116 billion. With the 301 billion hryvnia that was already there, this added up to 417 billion hryvnia. And where did the money that could have been made—more than $100 billion—go? I think we need to think about how the economy and imports are going in general. I don’t give a number because I want to hear it from the government. And lastly, there are benefits for importing cars, generators, batteries, transformers, and other “energy” goods” — The economics expert sums up.
Customs service by the state: Plans for bribery
Yaroslav Zheleznyak: Economist, delegate of the people to the Verkhovna Rada for the ninth session
“And the main reason why customs can’t do their job is because people steal there.” “Billions are being stolen, and the people in charge of it now look more like a group of thieves than wartime leaders.”
Elena Shcherban, who is the Deputy Executive Director of the Anti-Corruption Action Center, has also said that there is corruption. She said that the Bureau of Economic Security (BEB) should have dealt with these crimes, but it doesn’t show any results.
“That is, customs and the other groups that should help bring the economy out of the shadows don’t do anything. They don’t do their jobs; instead, they steal.” -Shcherban says
Plan for exporting grain from Ukraine
Zheleznyak says that the VSK for economic security got a lot of information about corruption at the customs office when grain was being exported. The SBU and the Bureau of Economic Security found out about the latest scheme, which involved more than 10 high-ranking officials.
“They set up a huge system for grain exports from Ukraine to avoid paying taxes. The state lost hundreds of millions of hryvnia because of this. Participants in the scheme used more than 370 commercial structures that showed signs of being made up.” – written down in the SBU.
The plan for exporting grain through the grain terminals in the ports of Odessa, Chernomorsky, and Yuzhny worked like this:
“Businessmen bought a lot of wheat from private farmers, agricultural businesses, and large agricultural holdings by making up fake structures.”
Then, the goods were moved from one “laying company” to another to confuse trade chains and get out of having to pay required fees.
Then they sold the grain to exporters, who took it overseas to sell.
Customs Service of the State: Infractions at Customs in 2022
The State Customs Service says that the number of people who broke its rules went up by 5% in 2022. In the past year, 11,098 violations of customs rules totaling UAH 2.9 billion were found. In total, illegal items worth more than UAH 697.5 million were seized. Among them were:
- goods made by industry for UAH 457.5 million;
- For UAH 49 million, you can buy food and farm goods;
- currencies for UAH 147.3 million;
- cars and trucks for UAH 43 million.
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