What Do Ukrainian CEOs Think of Applying for Reduced Rate of the Single Social Contribution Tax?

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In February 2015, the Institute for Economic Research and Policy Consulting (Kyiv) held its regular quarterly survey of industrial enterprises as a part of its Business Tendency Survey. Data was collected through the panel of 350 enterprises by telephone interview. The respondents were asked a question “Can your company use the possibility to apply a reduced rate of the single social contribution?”. Let’s take a look at the results.

General Tendencies

According to the surveyed managers of industrial enterprises, the requirements to apply for a reduced rate of the Single Social Contribution are rather difficult to meet. Thus the CEOs are quite pessimistic about their chances to use the opportunity to reduce labour costs. In particular, 31.3% of respondents think that they will not qualify for the reduced rate of SSC and only 6% of respondents replied that they plan to use this opportunity in 2015. The forecast for the next year is more optimistic: 17.9% think that they will be able to apply the reduced tax rate in 2016. At the same time, the majority of respondents (44.8%) do not know if they can qualify for the reduced SSC rate. 2

Small, Medium and Big Enterprises

The distribution of responses on the reduced SSC rate is practically identical for different sizes of enterprises.1 The share of those who think that they can pay the reduced SSC rate is quite similar in all three groups: 22.5% for small, 26.7% for medium and 21.5% for big enterprises.

At the same time, enterprises of different sizes differ in estimating the probability to use this opportunity. In particular, managers of small enterprises are the most pessimistic – 36.3% of respondents think that they will not be able to apply the reduced SSC rate, the share of managers of medium and big enterprises sharing this view is 28.7% and 27.7% correspondingly.

Moreover, CEOs of small enterprises are more sure than CEOs of medium and big enterprises that they will not have the opportunity to use this benefit. Managers of small enterprises also have the lowest share of “don’t know whether will be able to use” response (41.2%) and higher share of “will not be able to use” response. The share of big and medium enterprises that are not sure whether they will be able to apply the reduced rate of SSC is higher and equals 50.8% and 44.6% of respondents correspondingly.

An article by Oksana Kuziakiv and Viktoria Bespalko

More details about the survey can be found at http://www.ier.com.ua/en/proekt_dilova_dumka/?

1 Small businesses (up to 50 employees), medium-sized enterprises (51-250 employees), large enterprises (more than 250 employees).

The Institute for Economic Research and Policy Consulting - Kiev