In Ukraine, IT Freelancing Under Threat 359
An anonymous reader writes "According to the new tax law (Google translation; Russian original) that is being developed now and should take effect on January 1, 2011, it will not be possible for a private Ukrainian entrepreneur to provide any services to foreign companies without becoming a full-fledged company with a dedicated bookkeeper. Currently it is possible to perform such services and pay the equivalent of $25 in tax. Instead of raising the tax (which is overall welcomed by the community), the legislators plan to outlaw ISP, e-commerce, and Internet-based services — along with any services provided to foreign entities — for individual entrepreneurs. So starting in 2011, freelancers in Ukraine will have several choices: stop doing freelance work, start working illegally, become a full-fledged company subject to multiple cumbersome rules for taxation, or leave the country."
Simple solution (Score:1, Insightful)
Let's just apply to freelances the same taxes and rules that apply to companies.
This way you can still be a freelance, the taxes are rised and you don't have to become a company, just follow its rules.
start working illegally (Score:3, Insightful)
Harry Tuttle
Dissident Heating Engineer
Similar to US? (Score:2, Insightful)
So? (Score:5, Insightful)
They will work illegally. No big deal. That's what any intelligent citizen of any country does when their lawmaking weasels start cranking stupid laws like that.
Re:Sigh... (Score:5, Insightful)
Also as a Ukrainian (at least, Ukrainian born), I'm proud of the choice most would choose when faced with an oppressive, corrupt government.
Re:"Professor killing Ukraine (Score:5, Insightful)
Well, he got elected fair and square after 6 years of rule by the pro-Western faction, so I guess people hated them more...
Re:Let me get this straight... (Score:5, Insightful)
The deal is the widespread tax evasion in Ukraine. Not widespread as "German federal states are buying the Swiss bank account CD and expect a rise of self reports" but as in "Taxes? Somebody actually pays taxes in this country?"
Re:It worked to stop Al Capone (Score:3, Insightful)
I'm a freelancer in the US, most of my work is for a company in Taiwan. My work is legal and ethical. I keep not-well-organized but truthful and complete books with the help of a family member. I pay at least as much in taxes as I'm supposed to, and the cost of having a professional do them would quite probably outweigh any additional reduction they'd find.
The idea that I must be doing something wrong because I don't employ a full-time bookkeeper isn't just flawed, it's deeply offensive, and I believe worthy of an apology to me and every other ethical, law-abiding, tax-paying freelance developer.
Re:Let me get this straight... (Score:2, Insightful)
If German tax code is more complicated, then I really feel for Germans.
Re:Let me get this straight... (Score:3, Insightful)
Re:Sigh... (Score:1, Insightful)
Do you mean, wring their hands, cave in and get over it? Because that's the trend lately.
Re:It worked to stop Al Capone (Score:1, Insightful)
> We all must avoid taxes
did you get free education, health care etc ?
I did. I don't mind (some) taxes.
Re:It worked to stop Al Capone (Score:2, Insightful)
How the fuck does this outer-libertarian ranting get modded "interesting"? Guess what, the currencies are backed by the systems that tax you. I think Jesus said it best: render unto Caesar.
If you think it's your responsibility to not pay taxes, you should also consider it your responsibility to not use official currency, use roads, the power grid, water, etc., etc. If you do all that, then fine (I don't have a problem with survivalists, society needs an opt-out!), but otherwise stop justifying your greedy "I've got mine" attitude with a whole bunch of bullshit sophomoric philosophy.
Re:Let me get this straight... (Score:5, Insightful)
Oh yes, the Reagan theory of economy. I wonder how many more countries will go bankrupt before they realize that it doesn't work, and that they are not an exception?
But hey, the financial elite of those countries can get themselves a bit more money at the expense of everyone else, so it's okay, right?
Re:Leave the country. (Score:5, Insightful)
Shhhh. The former Soviet states are now shining examples of capitalism. Pointing out that internal passports are still required (and that pro-Western governments are so hated that governments which implements these sorts of laws are voted in democratically) ruins the dream.
Re:Notice anything? (Score:3, Insightful)
I don't need or want a union to look after me(for a fee that might as well be another tax). I'll do it myself, thank you very much.
As I said, speaking only for myself here...
Re:Let me get this straight... (Score:1, Insightful)
Oh yes, the Reagan theory of economy. I wonder how many more countries will go bankrupt before they realize that it doesn't work, and that they are not an exception?
You got something better in mind?
When's the last time you got a job from a welfare bum?
Re:Let me get this straight... (Score:5, Insightful)
The comparison is unfair. According to Wikipedia [wikipedia.org] (which we know is inerrant) 95% of taxes in Germany are to the federation; German states collect much less taxation than US states, and their taxation rights are limited. In particular, the German VAT goes to the federation, whereas sales tax in the US go to the states or other local authorities (IIRC).
A fair comparison would be summing up all the federal and state Finanzämter and comparing with the sum of the IRS and local tax authorities in the US.
Re:It worked to stop Al Capone (Score:3, Insightful)
A pure sales tax with no external correction penalizes the poor by forcing them to spend a larger percentage of their income on taxes on necessities. This is why a graduated tax system makes sense; those who can best afford the burden shoulder more of it. Unfortunately, corporations often pay no taxes, which should never happen; they should be paying the most taxes. As well, the top taxpayers in the US (as in, those cutting the largest checks to the IRS) pay taxes on only about 50% of their income. That's right, the wealthiest among us manage to dodge 50% of their obligations by playing games with capital gains.
If we move to a flat tax we'll still need redistribution of wealth to support families in poverty, and not supporting them is no solution — it only causes problems for the rest of us. Of course, the 'poverty industry' founded on a broken promise (40 acres and a mule) is alive and well today. It is not difficult to imagine that America would be a wealthier place without what amounts to a continuation of segregation.
If we instead simplified the tax code and eliminated the loopholes that corporations use to avoid paying taxes, the tax burden on the average citizen would be bearable. Instead, corporations bought legislation forcing the taxpayer to bear their burden. They want you to believe that the current tax system cannot work. Most proposals for a flat tax system exempt parts and raw materials bought for manufacturing, so they won't really help make corporations pay their taxes.
Re:What prompts something like this? (Score:2, Insightful)
Most "freelancers" in the Ukraine are actually really employees. A strange coincidence of a building full of hundreds of "freelancers" all working on projects for the same client...
The reason, a 25€ / year "flat tax" on top of the salaries paid for the hiring company. That's a HUGE difference to the income tax / social security in, for example, European countries. In my own country, workers take home about 50% of their total official wage, and the company has to pay another 50% on top of that from their side (which does not appear on your wage slip). That means in pure cost, what the worker takes home is about 1/3rd of the wage cost for the company.
Now, cost of living in Kyiv is actually very high - so the net wages of the people there are actually not that far off the net wages of EU countries. If the cost benefit because of taxes falls away companies will reconsider the cost/benefit of distributed development and this may *seriously* harm the whole outsourcing IT industry in the Ukraine, and I believe that's actually a very significant industry there.
He did it to prevent territorial pissing matches (Score:3, Insightful)
And I am half German too. (No idea what the relevance is to anything, but apparently there is some)
It's a pre-emptive strike against being called a bigot for daring to criticize the policies of a government or country to which you are not native. People get that a lot, hence the poster's reflexive flinch and disclaimner. I've experienced that in the UK for daring to point out the obvious, because, despite being a dual citizen, my accent is North American. My wife (who is English) gets the same shit when she criticizes an obvious flaw in America. These are classic cases of territorial identity and nationalism trumping critical thought, and the GP obviously wanted to avoid that. Which he by and large did, but not without the cost of this tangent. :-)
Re:you're a freeloading parasite (Score:2, Insightful)
Re:INCREASE in TAXES = FIGHT FLIGHT or FRAUD (Score:3, Insightful)
1: No absolutely not. My experience working for some rather large companies is that they are not really more effective then the government in general. One big problem the government have is that they can't hide their fault from the public the same way that a corporation can. And that the public care much more.
So when a large shipping company has to drop(And then redo all development) of their internal shipping system costing them >100 million dollors, all the publicity they get is an interesting article about prototype based development(Including a few things not to do).
When the government fuck up an computer project in the same size, they get multiple newspaper frontpages and often long and very public investigations about the cause. (Something good companies also do, but they keep it internal).
2: That is true. My rule of thumb is that very large organisations(Including the gov) have a rather large overhead but are still relative effective because their size allow them to access to the right(Or at least not total wrong) people to lead a project. Small companies can be really effective because of their much lower overhead, but they often relay on very few people doing the right thing to work. So sometimes they do really stupid things(Se: Thedailywtf.com) because they don't have access to any internal people who know anything about the subject.
Re:It worked to stop Al Capone (Score:4, Insightful)
In my world no company would get any public funding at all.
In your world there would be no corporations, only cooperatives and partnerships. There is absolutely no basis in libertarian political theory for the existence of corporations, whose primary purpose is to allow groups of individuals acting under the rubric of "a corporation" to do something that no individual acting alone, in partnership, or as part of a cooperative can do: avoid legal liability for the consequences of their individual actions.
Corporate law is a pure product of the state's monopoly on force, which is being used to decree that certain types of organization (corporations) are to be priviledged over others (cooperatives, partnerships and individuals acting alone.) The only reason for this is pragmatic: corporations are huge engines of creation and productivity, and we owe a great deal of our wealth to the corporate form of organization. But that wealth is made possible only by the nanny-state sheltering individuals within corporations from the consequences of their actions.
So it is not clear why any libertarian keep talking about what "companies" can or cannot do, as in a libertarian system there would not and could not be any companies or corporations, only fully-liable individuals acting in partnership or cooperation.
Re:So? (Score:2, Insightful)
An intelligent citizen would find ways to replace their stupid lawmaking weasels with more suitable stupid lawmaking weasels. (snip) dictators (snip) co-operate (snip)
That's not intelligent, that's idealistic, unrealistic and inefficient.
Doing what you say requires organizing lots of people. Meetings. Public appearances. Publicity. And funding for all that. And you get less work done in the meantime, so you'll likely get less income during the process, which can take years. And you may put yourself or your family in danger.
On this case, being a "delinquent", on the other hand, just requires you to continue doing what you were doing. You just need to be a little more careful about who you tell and what you say about your business. In my view that is the intelligent choice, by far.
Re:INCREASE in TAXES = FIGHT FLIGHT or FRAUD (Score:3, Insightful)
I do not think you have as wide a consensus as you might think.
Your first item - "government will ALWAYS cost more" is demonstratively wrong. There are numerous counter-examples (health care is a big one). It is true that governmental systems have a variety of forces that tend to promote certain types of inefficiencies, but competing companies also have forces that promote inefficiencies - some of these forces are the same for the two types, and some are different. The costs associated with advertising for example could (and in some cases do) lead to competing companies costing more than a government monopoly operation. There are design and regulatory systems that can work towards countering these tendencies in both cases, and I would think that everyone would be able to agree that it is worthwhile to implement such systems - but I would of course be wrong. There are a large number of people who cannot seem to accept that all government programs are not inherently evil, and probably a similar number of people who could never accept that all companies are not inherently evil.
A bit of a shame really.
So was Greece following the Reagan theory? (Score:3, Insightful)
Let's look at the countries going bankrupt now... Greece? Socialist. Portugal? Socialist. Spain? Socialist. UK? Not quite bankrupt yet, but socialist. United States of America? Socialist, and racing towards bankruptcy as fast as congress can carry it. Are any of those countries following Ronald Reagan's model? No! They are, as usual, following the Marxist liberal elitist model, and we have a century of empirical evidence, from the Soviet Union to North Korea to Cuba to Venezuela to Greece to East Germany (the list goes on and on) that flat out proves your Marxist ideas don't work.
So that said, what about the competing capitalist model (which Ronald Reagan generally believed in)? We have centuries worth of empirical evidence that that model DOES work. The most obvious proof was the 18th and 19th century United States of America, which with a very tiny, unobtrusive government went from undeveloped continent to world superpower faster than any nation in the history of the world (and it also saw much improvement during the 1980s when we switched from Carter socialism to Reagan capitalism). But besides that, there are a number of other countries the tilt towards the free market end of the spectrum that have also done well, such as Australia, Hong Kong, and now even China, which has jettisoned much of its communism and socialism in favor of capitalism, because capitalism grows their economy at a rate of more than 8% (similar to what the US used to be capable of doing).
So yeah, the evidence is in. The more capitalist you are, the more wealthy and economically advanced your country is. The more Marxist you are, the quicker it will be that your country goes into bankruptcy (at which point you get riots and/or the government collapses).
Capitalism lifts all boats. Capitalism provides jobs for everyone. And if you look at America, which up until Obama was by and large the best example of capitalism, you will find that even our poor are in the top 10% worldwide, and maybe even in the top 5%. Even most low income families here have their own washing machine and dryer, unlike many nations in Europe. Even low income people here tend to have more space than the tiny flats common in Europe. Even the poor here tend to have one (or often two) cars. They may not be very nice cars, but in most countries in the world you are lucky to have a bicycle. Most of our poor also find some way to get a TV (usually a pretty nice one) and cable TV service, as well as enough food to live on. And a lot of lower income people have cell phones and even luxuries like alcohol and cigarettes, which cost quite a bit. So let's be honest... being poor in a capitalist society may mean you don't have a boat, a luxury car or a second house by the lake, but it still lifts their boat WAY higher than the rest of the world. Go look at Africa, Venezuela or even Europe and then come try to tell me that the poor in capitalist America aren't way better off than the poor, and even the middle class, in a lot of these socialist countries.
Re:It worked to stop Al Capone (Score:3, Insightful)
I kind of doubt that; what you're advocating will create a gigantic power vacuum where the government used to be
- at least the US government was not always occupying that place, at least not before the beginning of the twentieth century.
The best economic development, the biggest increase to overall quality of life for all people, including the most poor came with the industrial revolution, with the capitalism.
Before capitalism there was no way to put together enough money and resources to start mid-size businesses. You are proposing a false choice: either government provides money to start a small business or the government does not provide money and small businesses do not start.
This is ridiculous, government does the exact opposite to helping small businesses to start, they tax income. When your personal income that you are not spending on consumption is taxed, you cannot save money to invest and to start a small business.
Yet another problem that government creates is inflation through printing money that is not backed up by production. You are again not understanding economics. Production is the only valuable thing, consumption is not. Any moron, any fool, any idiot, any dunce can consume.
Consumption is the easiest thing to do. Production is hard and production is the only real measure of economy. If you produce nothing and only consume while borrowing/printing money, you are growing the trade imbalance that will eventually crash you.
After the second world war the Keynesians thought that US economy will be worse of once the soldiers come home, because there would be such huge unemployment. The real economists - Austrians, understood that a huge supply of working force is an important instrument needed to start production, they also knew that women would come home from factories, this is how it worked out and economy boomed because of so much labor and no minimum wage laws, pretty much everybody who wanted had a job. Production begot consumption, it does not work the other way around. iPad did not exist, then it was produced and then consumption of iPad started, that's how it works.
Sales tax would be plenty enough for any government to maintain a justice department, a punishment system and a minimum military needed to protect the state.
The objection is often that sales taxes 'punish the poor', well, this is a very simple thing: if you are poor enough that you feel you must get some help from the government, do actually file your income tax papers and if you qualify, get the sales taxes returned to you, but you are exchanging it for the government getting into your private life.
Re:It worked to stop Al Capone (Score:3, Insightful)
Libertarians are against government getting into economics and into freedoms management through things like morality laws etc.
If only that part were actually true, though it it were we would be talking anarchy not (Neo-)Libertarian. The big L Libertarian party wants the government to enforce contracts which interferes with economic freedom, and they want they government to do so by force. By the fact that Libertarians want a "punishment system" they are by definition looking to the government to impose moral judgements. Libertarians want no more freedom than any other form of government, they just want their freedoms rather than someone else's.