The President of Ukraine Meets Businessmen Protesting Over New Tax Code

KIEV, Ukraine, November 29, 2010 - Over the weekend, the President and the Prime Minister of
Ukraine met with the representatives of the businessmen protesting against
the new Tax Code, adopted by the Ukrainian Parliament on 18 November, 2010.
Since then, the representatives of Ukrainian SMEs have been protesting on the
country's main Independence Square in Kyiv, demanding the President's veto of
the Code.

In response to the protests, the President Yanukovych and the
Prime Minister Azarov decided to personally talk to the entrepreneurs. The
country's two main officials spent more than an hour over tea with the SMEs
representatives in one of the tents put up on Kyiv's central square. As a
result, Yanukovych stated that the possibility of vetoing the document is
very high.

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"We share the same goal: to bring the economy out of shade and
stimulate the development of the country and business through tax policy," he
said. "I object this Code's strengthening of the administrative pressure of
the Tax Administration on business". Viktor Yanukovych suggested the
protesters and the Ukrainian government create a special joint working group.

Aimed at simplifying the Ukrainian tax system, the Code,
however, gave rise to much controversy among businesses. Many SME owners
throughout the country claim they would significantly suffer from the new tax
system which the Code is designed to introduce.

The key point of controversy in the new Tax Code is the so-called
simplified taxation system, introduced in 1999. According to the system,
individual entrepreneurs with annual revenues not exceeding 300.000 UAH
(37500 USD) are allowed to pay the unified monthly tax of 200 UAH (25 USD)
with an exemption from all other taxes. Thus, many small businesses were
relieved from a heavy tax burden. However, as reported by many analysts, the
simplified tax system was largely used by the Ukrainian companies to evade or
minimize their tax liabilities.

The new Code introduces numerous restrictions on the simplified tax
system as to minimize the possible tax evasions. As the protesters claim,
together with the tax evasion schemes, those restrictions will destroy many
diligent small businesses. Yanukovych offered to check "every syllable" in
the draft before 2 December, when he will return from an OSCE summit in
Astana.

For more information, please contact Natalya Shulevskaya +380633776645 news at wnu-ukraine.com, Project Manager at Worldwide News Ukraine