The COVID-19 pandemic is a tragedy that has affected virtually the entire world and every business. We are yet to feel the full impact on the global economy and profitability of individual businesses. However, based on ITW Systems’ ten years experience in the Ukrainian and international markets, we can identify the key problems that we face and which are particularly relevant during a pandemic.
- Absence of legal instruments for investment protection
Now, in times of economic crisis, it is crucial to continue the process of forming and maintaining the image of Ukraine as a country with an attractive investment climate. Unfortunately, based on ITW Systems’ experience, there are now situations where customers, including municipal structures, breaching contracts, and delaying payments for months. This can have a critical impact on both the ability of businesses to maintain their livelihoods and the investment attractiveness of Ukraine to foreign investors as a whole. Alexander Lopatin, the founder of ITW Systems, has already raised this concern in an online meeting with the Deputy Head of the Office of the President of Ukraine, Yulia Kovaliv, emphasizing the importance of the state's position on this issue and the need to develop effective mechanisms for investment protection.
- Excessive tax burden, particularly noticeable in times of crisis.
The Ukrainian government has adopted several legislative initiatives to support businesses in the fight against the epidemic’s impact on enterprises. In particular, exempting small businesses from paying certain taxes, simplifying the customs clearance and taxation of drugs and equipment imported to combat the epidemic, etc. At the same time, some issues remain unresolved that can help with the operation of a business during the pandemic and will make the recovery easier and faster after the epidemic has been overcome. For example, "tax holidays" and capital gains tax as an alternative to income tax. After all, if money from a business is reinvested in its expansion and development, then it is inappropriate to consider it as profit and tax it. Moreover, reinvesting in the expansion of production means new jobs, purchase of equipment and materials, an increase in turnover, etc. This, in turn, will bring income to the budget through other taxes, such as VAT.
- Business exposure to unfair competition.
Considering the difficult situation in which the business found itself during the current crisis, it is reasonable to predict increased competition in all markets. Accordingly, this can lead to an increase in the exhibition of unfair competition, including deliberate dissemination of knowingly false information in the media. Unfortunately, we have already experienced such methods of attacks from our competitors and have found that there are no effective legal instruments for defending business reputation, securing the rule of law, and protecting against the unfair business practices in Ukraine. Also, there is a need to develop rules and regulations in compliance with generally accepted in civilized world standards of journalistic ethics and responsibility for the accuracy of published. These are important factors influencing the business climate of the country because to invest in Ukraine, every business needs to know that there are legal and effective tools to defend their reputation.
