EBA proposes that social security tax upper rate not be increased

The large increase in the upper base for accruing single social security tax, in combination with a mechanism for cutting the rate if salaries at enterprises are increased by at least 30%, will result in honest taxpayers facing a large tax burden, the European Business Association (EBA) has said.

"EBA believes that the combination of the two requirements is a very de-motivating factor for legal businesses. We should say that this complex of measures will be most discriminative against those taxpayers who paid large wages to employees and fairly fulfilled their liabilities on the payment of single social security tax," reads an association press release.

The EBA said that the increase in the upper base for accruing single social security tax will promote shadow wage payments, which is not in line with the intentions of the Ukrainian authorities.

"The EBA proposed that the upper base for accruing single social security tax should not be increased with the retaining of the existing level. We also support a permit to apply the decreasing coefficient for enterprises which will increase the wage fund," reads the report.

The association believes that the mechanism for applying the coefficient should be publicly discussed.