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Why Ukraine must combat its own illicit economy

Why Ukraine must combat its own illicit economy

Russia's brutal full-scale invasion of Ukraine has brought devastation, suffering, and human tragedy. Ukraine’s lionhearted defenders continue to fight for freedom and independence. The business community continues to operate in Ukraine, keeping the economy running, paying taxes, and employing the workforce. 32% of AmCham members have had instances of employees killed; 30% of companies have had their plants and facilities damaged. 84% have employees who are serving in the Armed Forces of Ukraine.

The full-scale war has shifted public spending priorities: funding the army is now the top priority.

AmCham is grateful to international partners for their unwavering unity and support in Ukraine's existential fight. We urge Ukraine's international partners to ensure the seizure and transfer of the frozen Russian sovereign assets to Ukraine. The aggressor must pay for devastating actions and compensate all damages. Russia must be held accountable for all its crimes and compensate for the destruction caused.

As Ukraine’s Parliament and Government are now debating whether to increase taxes on transparent businesses AmCham calls on Ukraine's state authorities to start a real fight against the shadow economy. The state budget losses due to illegal markets across different sectors of the economy are enormous. Illicit tobacco trade alone has caused budget losses of 42.5 billion UAH (over 1 billion USD) in 2022/23. These funds could have been used to purchase thirty F-16 fighter jets, critically needed to protect the skies over Ukraine. Eliminating the illicit markets will also ensure a level playing field and boost the country's investment attractiveness.

The voice of business must be heard — business representatives should be engaged in discussions of tax policy changes. Predictability and transparency of tax policy are two pillars that foster a sense of trust and confidence in the tax system. AmCham Ukraine calls for a fair approach to collecting the existing tax levies before considering alternative options for increasing the tax burden on transparent taxpayers.

To fund the fight for victory Russia must pay, and the illicit economy must be eliminated. AmCham stands united with Ukraine on the path to recovery and victory.

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