Deputies of the Mlynivska settlement amalgamated hromada, Rivne Oblast, adopted a decision on a single tax rate for entrepreneurs of the 1st and 2nd tax groups at the level of 1%. The decision will come into force from 2020, as reported by “UA: Rivne”.

In this way, the hromada hopes to attract as many entrepreneurs as possible to its territory. Already this year, it plans to attract 1,300 entrepreneurs. Moreover, they must become hromada residents, that is to be registered on its territory. In this way, the AH tries to solve the issue of accumulating various kinds of subventions. Although, at the same time, a 1% tax rate will result in hromada’s financial losses of UAH 1.8 mln.

Decentralisation.gov.ua appealed for a comment to Viktor Ventsel, fiscal decentralisation expert of the U-LEAD with Europe Programme.

“The idea of ​​attracting entrepreneurs in this way is interesting, but I would like to urge a caution. First, the current maximum single tax rates are not high as well – 10% of the subsistence minimum for Group I (in 2019 – UAH 192.1 per month) and 20% of the minimum wage for the Group II (834.6 UAH per month). Secondly, attraction of 1300 entrepreneurs, as reported by the hromada, is quite problematic. It is almost 7% of the number of all AH residents. In addition, such a number of entrepreneurs should have appropriate work in the hromada. The increase of the basic subsidy at the expense of population growth is theoretically possible, provided that such residents will be officially registered on hromada’s territory, while the volumes of PIT will grow at a lower pace than in Ukraine as a whole.”

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