Ukraine may move away from the mandatory use of certificates of completion

Let entrepreneurs decide among themselves how best to proceed. Why is the abolition of mandatory completion certificates important for business?

Ukraine may move away from the mandatory use of work completion certificates. Parliament committee has backed draft law No. 14023, which proposes giving entrepreneurs the choice of whether to use work completion certificates or invoices. Dmytro Boyarchuk, Executive Director of CASE Ukraine, explained to Forbes the benefits for business.

Key points of the article:

• Certificates of completion are used as primary financial documents exclusively in the post-Soviet space. Do not confuse them with acceptance and handover documents, which are not primary financial documentation but merely certify the fact that the quality of the work has been accepted.
• 74.1% of entrepreneurs support the idea of abandoning the use of certificates of completion and believe it would be easier for them to operate in an environment where signing such certificates is not mandatory.
  At 2021 prices, the savings from abolishing the mandatory use of certificates of completion would amount to up to 34 billion UAH per year, which at the time represented 0.6% of GDP.
• The arguments put forward also failed to impress officials at the Ministry of Finance, as abandoning the mandatory use of certificates of completion would likely have disrupted a certain status quo that suited them.
• We managed to find support for such changes among business associations and within the Ministry of Economy, which was headed at the time by Yulia Svyrydenko and, in particular, in the person of her first deputy, Oleksiy Sobolev.
• The window of opportunity regarding the certificates even created some competition for the implementation of this idea.
• The Chair of the Verkhovna Rada Committee on Finance, Tax and Customs Policy, Danylo Getmantsev, submitted his own draft bill, and it was his version that was approved by the committee on 30 September.
• Getmantsev’s draft bill is more conservative, as it requires a contractual stipulation that the parties shall not use certificates of completion in their dealings, and the relaxation is limited exclusively to services and does not apply to leases or works.
• The proposed changes allow invoices to be used in transactions, but retain the option to continue the usual practice for those who work with certificates of completion.
• The safeguards set out in Danylo Getmantsev’s draft bill are superfluous, as the removal of the mandatory use of certificates of completion is a relaxation specifically for micro and small businesses, which deal with small orders worth a few hundred or a few thousand hryvnias and operate without a contract, simply on the basis of an invoice. It is precisely for them that the time spent tracking each other down to draw up certificates of completion, when everything has already been done and paid for, is the most irritating and, in fact, unnecessary.
• Therefore, the requirement to include a waiver of the use of certificates in the contract effectively excludes from the proposed changes precisely those who need them most.

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