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It was enough for businesses to work with the new electronic value-added tax administration system which was in commercial operation for two weeks to have the final say on its major component, VAT accounts – it doesn't work. It was the beta version of the system that revealed many methodological and technical drawbacks of electronic VAT administration. This has been repeatedly emphasized by the Ukrainian League of Industrialists and Entrepreneurs.
"It's not only about numerous technical, software-related errors popping up during electronic mode [of VAT administration], but also the lack of technical engineers. This is another step towards depleting companies' working capital, which is one of the most painful issues for businesses and for the banking system. We're all for the fight against corruption, the shadow economy, but it should be done very responsibly, applying the "do no harm" principle, amid the current conditions," ULIE President Anatoliy Kinakh said.
Having tested the system for two weeks, companies say it’s inefficient, absorbs working capital, and payments transferred to the customs don't arrive on time. Even the money transferred to the Treasury Account is delayed. Businesses sustain losses, paying their own money for an imperfect system. \
"All speak about the negative consequences of electronic administration. Companies started moving their production facilities to neighboring companies, some even suspended their business processes," ULIE Vice President Yulia Drohovoz said. ULIE experts claim that businesses should not pay their own money for the mistakes of the Fiscal Service of Ukraine by withdrawing it from production processes, i.e. from paying salaries, buying materials, components, products, payment of single social security tax, and the fulfillment of other obligations. Many taxpayers are forced to cease work with the further liquidation of their business. Employees of closed companies will go to labor exchanges. The state will not only fail to receive taxes, but will still be obliged to pay compensation to the unemployed. The ULIE will constantly monitor the situation and do its utmost to minimize possible negative effects, and insist that the system be carefully analyzed, and until then – its use should be postponed until January 1, 2016.