The “National Cashback” program significantly distorts competition and discriminates against small entrepreneurs, – statement of business associations

Photo by ua.depositphotos.comBusiness associations, which unite small and medium-sized businesses, announced the shortcomings of the “National Cashback” Program and called on the authorities to eliminate them.

This is stated in a joint statement of more than two dozen associations of entrepreneurs from different regions of Ukraine, including the All-Ukrainian Professional Association of Entrepreneurs, the Association of Private Employers, the 4Business Association, the ROMB Alliance, the All-Ukrainian Association of Entrepreneurs and Consumers, etc.

“Recently, the Ministry of Economy published data on the impact of the “National Cashback” Program on the country’s economy. According to the calculations of the Ministry of Economy, the implementation of the project ensured GDP growth by 0.001% in 2024, in fact – within the limits of statistical error. At the same time, the Program significantly distorts competition , gives preference to trade networks, not extending to small and micro entrepreneurs,” said business representatives.

According to the signatories, the practical experience of the application of the “National Cashback” Program by entrepreneurs in 2024 showed key shortcomings that do not allow to fully apply its potential. It is about:

• high regulation and relative difficulty of the procedures, in particular, separate and diverse requirements for manufacturers, goods, sellers, consumers, and ways of spending cashback. This requires a high level of preparation of all elements/stages of program implementation and significant communication with citizens. Yes, almost 700,000 citizens did not receive payments due to the fact that they did not activate their cards in time to pay cashback in the Diya application.
• the program does not cover “non-digital” citizens of Ukraine at all (not everyone has the appropriate devices or wants to install Diya/can work with it);
• all business entities that are on the simplified system of taxation and reporting are excluded from the Program as sellers. That is, the program does not apply to food markets or holiday fairs either. In most cases, the program operates through large and medium-sized retail chains, distorting the conditions of competition in the retail market, where such chains already have dominant market power.

According to experts representing the business association, “the effort of the Ministry of Economy to discriminate against the simplified system of taxation and reporting is incomprehensible, because in terms of tax indicators, the simplified system is in most cases superior to the general system for paying taxes.” Such discrimination is “counterproductive and harmful to competition, business conditions and the economy in general.”

The analysis of the implementation of the “National Cashback” program for 2024 conducted by the business community revealed a number of shortcomings that are proposed to be eliminated for its full-fledged further implementation:

1. Return to the program of entrepreneurs on the simplified taxation system who use the PRO/PRRO and are willing to comply with all its conditions.

2. Revising towards an increase in the maximum amount of cashback per card that can be received (for example, UAH 6,000 instead of UAH 3,000 per month), which will attract more Ukrainians.

3. Ensuring a wider distribution of detailed information about the program, including instructions on how to issue and activate the corresponding bank card (according to a survey by the Razumkov Center – 40% of citizens do not participate in the program due to the lack of detailed information about it).

Ukrainian business calls on the President and the government to take into account the proposals of entrepreneurs, to eliminate distortions of competition, and to extend the Program to small and micro businesses.