Media: almost $150 billion has been transferred out of Ukraine into offshore accounts since 1991
According to various estimates, since 1991, 148 billion dollars’ worth of capital was withdrawn from Ukraine to offshore accounts. A leading researcher at the State University Institute for Economics and Forecasting of the National Academy of Sciences of Ukraine, Inna Shovkun explains in her article for ZN.UA.
The author points out that the reform of the fiscal system aimed at stopping the Ukrainian companies from “offshore” and “shadowy” ways of doing business can become a viable source of funds for the industrial development of Ukraine.
“According to different estimates, starting from 1991, Ukrainian business withdrew capital out of the country in the amount of 148 billion dollars. Not all these riches were withdrawn from the country by corrupt kleptocratic authorities. The businesses use offshores to legally reduce tax burdens, to reduce risks like loss of funds in banks going bankrupt and hostile takeovers and to simplify judicial protection for their interests, for example, from unreasonable claims from tax inspectors,” the article says.
The author points out that the creation of favorable fiscal conditions in Ukraine will facilitate the inflow of capital in the form of foreign direct investment and loans.
“Even now, offshore funds play an important role in industrial investments. In particular, the share of Cyprus in foreign direct investments in the industry of Ukraine was 19.3%, or $2.6 billion dollars as of October 1, 2016, the Netherlands accounts for 12.8%, or $1.7 billion dollars. The offshore funds are also entering the economy in the form of debt financing,” Shovkun emphasizes.
The economist also notes that in the informal sector of the economy, there are now funds circulating that comprise approximately 35%-40% of the official GDP.
The economist also notes that the funds circulating in the shadow economy are now equal to almost to 35%-40% of the official GDP of Ukraine.
“A long-awaited introduction of tax and customs investment incentives for new industrial production through the mechanism of industrial parks would allow attracting capital from shadow circulation and offshore into the development of the country's economy,” the author concludes.