State budged loses UAH 22 mln annually from illegal farmland lease

The budget of Ukraine receives from UAH 6 bln to 22 bln per year less as a result of shadow lease of agricultural land, Institute of Social and Economic Transformation (ISET) reports.

The data were obtained through a study of tax evasion schemes conducted by the ISET and the Centre for Social and Economic Research in Ukraine (CASE-Ukraine).

It is noted that the budget loses the most money from the schemes at customs, envelope salaries and transfer of profits to offshore.

"Over the past few years, the performance of the shadow economy has declined significantly, and this coincided with a reduction in funds redistribution through public finances," said CASE-Ukraine senior economist and co-author Volodymyr Dubrovsky.

According to him, gray economy enhancement is a natural response to excessive tax pressure. At the same time, the presence of a large "shadow sector" does not reduce the tax burden and distorts the competition.

The study notes that the shadow economy, estimated by the government at 30% of GDP, is concentrated mainly in big business. It dominates the economy and is abused to a large extent due to its informal ties with the authorities. Experts pointed out that this is the similarity of Ukraine with the CIS countries and the "atypicality" of the shadow economy in Ukraine compared to many other countries in the world, where the shadow economy is usually presented by the business itself.

Under the report, for the first time the study of tax evasion schemes was conducted in 2017. At that time, the largest budget losses were found in off-shore, customs and shadow land rental markets.

Previously reported that depending on the region and crop, from 10 to 25% of the Ukrainian grain market is in the shadow.