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."
Good for U.S. Programmers (Score:2, Interesting)
Sigh... (Score:5, Interesting)
As a ukrainian I can easily guess which option my fellow citizens will choose. And I'm not proud of it...
"Professor killing Ukraine (Score:3, Interesting)
The man is killing the country so he can kiss Putin's ass. Kills me. :(
It worked to stop Al Capone (Score:3, Interesting)
The US government tried 'policing' Al Capone to little effect. Tax evasion was what brought him down.
Lately Amsterdam has seriously 'cleaned up' its red light district in much the same manner. For a synopsis you can get a pretty good idea by reading the web page of Yab Yum, the 'leading' brothel, back in the day. http://en.wikipedia.org/wiki/Yab_Yum_(brothel) [wikipedia.org], or just google it.
Bottom line is: The city wants to audit your books. Which stands to reason money laundering is unacceptable and will not be tolerated.
Anyone doing any kind of legitimate business knows this, and knows the costs and effort required to maintain audit able records. These people expect nothing less of other businesses. It seems a reasonable expectation of anyone doing any kind of legal business, and keeps a level playing field, among the tax base.
Notice anything? (Score:1, Interesting)
The traditional rights of workers were won with aggressive, sometimes physically dangerous collective bargaining. When you don't do that, management assumes you're a pussy. That's why it's traditional in the US to exempt programmers from every labor law.
But convincing programmers they need a union is like trying to convince cats to knit a sweater. Oh, and you have to use a ball of catnip-laced yarn. You'll get something, but it won't be a sweater! All in all, though, with the cats you'll end up with a better final product and less tooth marks.
Watch.
Re:Let me get this straight... (Score:4, Interesting)
not to knock Germany, but you don't have lots of freelancers compared to Ukraine.
I hire Ukrainians all the time. I've never hired a German. (and I'm of German descent.) I've never even had a German freelancer bid on my projects @ 99designs, elance, guru, etc.
Most of EU still has not realized that high taxes kill entrepreneurship, and thus kill the economy. lowering taxes grows the economy and thus increases the tax base -- but having a sizeable tax base is not nearly as important as having a sizeable economy, so better to err on the side of caution and cut taxes and entitlements where possible.
To be fair to Germany (I'm half German), I rent about 10 servers in German datacenters, but that's in a big datacenter company. It's harder to find the sort of one-person shops (like mine) that are common in low-tax countries and/or rapidly growing countries like India and Ukraine. If Ukraine does this, it's to their overall detriment, I can assure you. If anything, they should CUT freelancer taxes to encourage foreign investment and create more jobs. If my price goes up, guess what... I just won't hire any more Ukrainians -- there are plenty of other hungrier people in hungry countries.
This is reality. This is business. If government stifles business, business leaves (as it should) and the economy shrinks and hopefully those idiots get voted out. If government invites business, economy grows, people get jobs, and (almost) everyone is happy. It's either a positive cycle or a negative one. Business needs government -- but government need business.
Too bad I can't hire my own government services (or not, as I choose and can afford). I'd probably hire more polite public servants. It'd be great if there were cooperatives I could join (or not, if I chose not to) that would provide roads, schools, security, libraries, etc. Even better if those cooperatives competed with each other for my business. Kind of like a Home Owner's Association in the U.S. or something like that.
Re:It worked to stop Al Capone (Score:2, Interesting)
It is everybody's personal responsibility not to pay any taxes to the best of their abilities. A municipality, a regional or a federal government wants to know what you are doing? Let them hire investigators and follow you for a while.
The best idea is to have an off-shore bank account where money is deposited by the employer, a bank account in a country where they don't harass people for being industrious. Since this is about IT, it is obviously easy to avoid any kind of problem with normal import/export laws, all the work is done over the net, so make sure to use encrypted channels, you'll be fine.
'Society' sticking its long nose into affairs of an individual must not be tolerated by the individual, he/she must do everything possible to not let this to happen or at least not to let it happen in an effective way.
We all must avoid taxes, we all must avoid being property of the state.
Re:Sigh... (Score:1, Interesting)
As a ukrainian I can easily guess which option my fellow citizens will choose. And I'm not proud of it...
There is missing option: form cooperatives with sole purpose of splitting costs of administration and legalese. Or, let someone else seize opportunity of registering front agencies which will do it for multiple freelancers. Now, I know it defeats the point of being a freelancer, but it could be done with arbitrary looseness and high preserved level of autonomy.
Re:It worked to stop Al Capone (Score:3, Interesting)
Most pragmatists are pragmatists; some communists live in a commune; a few Christian conservatives aren't repressed homosexuals. No libertarians live by libertarian principles. It's reassuring because I've always believed libertarianism to be the least realisable of all the well-known political ideals.
Perhaps if I wasn't privately educated and decided to drive a car I would understand where these libertarians are coming from. I can only guess that they're trying to say that their lack of success can be blamed on their reliance on the State?
Re:Let me get this straight... (Score:2, Interesting)
I hire Ukrainians all the time. I've never hired a German. (and I'm of German descent.) I've never even had a German freelancer bid on my projects @ 99designs, elance, guru, etc.
Could this be due to the fact that what you're offering might be financially interesting for Ukranians, but isn't worth getting out of bed for for those us in Western Europe?
This is reality. This is business. If government stifles business, business leaves (as it should) and the economy shrinks and hopefully those idiots get voted out. If government invites business, economy grows, people get jobs, and (almost) everyone is happy. It's either a positive cycle or a negative one. Business needs government -- but government need business.
Or...we already have jobs and the piddly sum you're offering to do your project isn't interesting to us in our little "cradle to grave welfare states".
Don't get me wrong, I firmly believe that your ability to solicit work online and get reactions from all over the globe is fantastic and of long-term benefit to everyone. To turn that into the usual small government argument is taking it a bit far however. Ukraine is a good example of a disfunctional government, not one to be upheld as a shining beacon for libertards everywhere.
And for the record, my country (the Netherlands) has been actively working to make it *easier* for 1 man shops to do their thing, resulting in tons of them popping up. Some of them are good, some of them are awful, but there's nothing to stop them from making it big.
Re:It worked to stop Al Capone (Score:3, Interesting)
What gets my goat about (I think mostly American) libertarians is that they are most passionate about individualism pertaining to a necessarily communal system: money. On the other hand, they seem to go quiet and mumble shit about 'states rights' if pressed on social liberties, which are clearly much more private matters of conscience.
Re:It worked to stop Al Capone (Score:4, Interesting)
If you follow MY ideas to the ultimate conclusion, then you'd have a working economy that could not be destroyed by state money manipulation and you'd have no wars that are funded by states that only benefit the largest players while destroying lives of people and nations.
I am not an anarchist, I am not interested in Somalia. I believe states have one real purpose: justice system, a court system and a punishment system to punish transgressions, such as harm done to individuals and to public property and environment.
In my world no company would get any public funding at all. There would be no income tax at all. There would be sales tax, which means that consumption is not encouraged, but production is and that is the real wealth, not fiat money.
In my world states would not have money to run wars of opportunity. In my world businesses could not own governments because governments would have very limited function: justice and punishment, which is much easier to control than all of the stuff governments do now.
In my world there would be no regulations against business, but in my world any business or individual hurting other individuals or public property (environment) would be punished severely both materially and criminally.
What do I do to live by my principles? My affairs are spread out between countries, bank accounts are where it suits me best, business is where it suits me best while I make any purchases again, in places that suit me best. It's about optimizing the life to get out of being a state slave.
Re:It worked to stop Al Capone (Score:4, Interesting)
Have fun with that. Good thing it only exists inside your crazy little head.
- oh, you are wrong, not that my head is that big, but you are wrong that corporations do not own the governments today in a way that they couldn't tell government to fuck off today.
You will see how BP, who is getting funded by governments of the world, who got to be the monopoly it is by getting help from UK and US governments even in such things are killing off democratically elected government of Iran in the 1953 I believe, that company will end up telling the US government to fuck off and rightfully so. Government that treats oil as if it is heroin, setting liability limits for companies that can do massive damage (75 million? that is the FUCK OFF) Government that pays hundreds of billions to such companies in contracts while getting almost no royalties? That IS the FUCK OFF.
Government that literally has people having sex with BP personnel, taking bribes, having drug parties together? That is the FUCK OFF.
Government will bend over and take it in the ass while talking smack. Individuals in government will not go against large corporations, they know not to bite the hand that feeds them.
At the same time the corporations like BP provide better security nets for people who have pensions in such companies than governments. Of-course in this year BP will have some trouble, but trouble will go away in a year or two, they'll manage.
--
Governments are owned by the banks. They are owned by the military industrial complex. They are owned by manufacturing complex. They are owned by mining companies. They are owned by medical/pharma companies and they are owned by Insurance companies etc.
All of this is precisely because governments' hands are in all of these pies through 'regulations' and various tax schemes.
Governments are slave owners and people are the slaves. Get over it and do something about it not to be one.
Re:INCREASE in TAXES = FIGHT FLIGHT or FRAUD (Score:3, Interesting)
So basically you want to say that low taxes lead to economy growth and less tax evasion?
Well, Ukraine is the best counterexample. Flat 17% income tax, but pretty much nobody pays it and the economy is in ruins.
And all that despite Ukraine having great premises for agriculture, lots of natural resources and also despite it has inherited an enormous chunk of the Soviet industry.
You see, most corporations and many people will try to evade taxes no matter how low they are.
Re:It worked to stop Al Capone (Score:3, Interesting)
Sales Tax to me seems like a great way to get back that capital your stealing for your country.
- I have no idea what you said there.
BTW I don't think the time period before Income tax really represented the situation we face today.
- definitely. The economy now is in a different shape, on one hand enough time has passed for some new innovation to kick in, on the other hand the small business has fallen pray to the government created monopolies, who then moved production to Asia. It was a time before Keynesian ideas came to power in governments that government must force economy into debt/consumption death spiral. Today the income tax is a much more deadly weapon to economies and entire countries due to wars that states shove down people's throats with income tax money.
Money is not printed frivolously and the government has broken up monopolies in the past who says they won't do so in the future.
- Standard Oil was not a monopoly by the time it was broken up and AT&T and the rest were government created monopolies in the first place. One hand makes them, the other destroys them, that's productive. Monopolies are government creations through free money/regulations that kill off competition, through income taxes that kill off small competition and through tax breaks that favor government created monopolies.
I'm sorry but we will never have a system that doesn't require some sort of favors to get the job done it's how politics work. It was like that before income tax and will be like that forever.
- government has no place in economy, that's the only way to make that idea work.
So avoid what you can legally it's your right to do so, but shoving money under the bed and hoping you'll be OK because you've got capital is pointless. Just look at Greece.
- you are incredible, you know that? Greece is doing exactly what I am against: government borrows money to give out all of the handouts for all of the government workers, who have amazing standards of living, except all of that is done on borrowed money.
Greece has no way in hell to pay their debts, never mind Germany getting them an impossible deal on cheap lending, of-course if Germany is so interested to keep France in the Union, they think they have no chance but to give Greece money to bail out the French bankers, who gave Greece the loans that could never be repaid in the first place. You are 100% clueless about what you speak there.
Re:IRS (Score:3, Interesting)
There's a reason for this. The US Constitution prohibits the federal government from doing a lot of different things. Back during the Great Depression, for example, FDR pushed through the alphabet soup of regulatory agencies, and a number of them got overturned by the supreme court, since they were stepping outside the constitutional limits. A supreme court justice sent a note to FDR telling him he was missing the obvious point: the federal government controls taxation, and so could use that to make the changes he wanted to make, constitutionally.
So what's happened is the tax code has become a proxy for being able to pass laws that other countries can at the national level. Taxes (and the commerce clause) are the engine for politicians trying to control our country, and as a result you have a tax code longer than the entire corpus of laws in most countries.
It also leads to an IRS that can basically act with impunity. A company I used to work for got audited, and the agent started off by summing all the deposits made into the company accounts as "income" to provide a "starting point for negotiations". This included TRANSFERS of money between accounts, and so the "starting point" for taxes worked out to be more money than the company made in a year. They complained to the agent's supervisor at the IRS who said, in essence, well yeah.