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In Ukraine, IT Freelancing Under Threat 359

Posted by kdawson
from the intended-consequences dept.
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."
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In Ukraine, IT Freelancing Under Threat

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  • by Anonymous Coward on Wednesday June 16, 2010 @01:48AM (#32587922)

    ...individual entrepreneurs need to seek the a tax adviser and foreign or e-commerce based services are outlawed.

    So what's the deal ? The situation is then similar to Germany, with the exception that the adviser is not mandatory but practically indispensable (even for freelancers) since the German tax system is the most complicated in the world.

    And I can assure you that there are lots of freelancers in Germany.

    • ... since the German tax system is the most complicated in the world.

      I seriously doubt that - have you got any references?

      • Re: (Score:2, Insightful)

        by worx101 (1799560)
        I don't think he has seen the US tax code, which I would like to note changes every year.

        If German tax code is more complicated, then I really feel for Germans.

      • Yeah, I'm pretty sure the Belgian one is more complex!

    • by dunkelfalke (91624) on Wednesday June 16, 2010 @02:34AM (#32588124)

      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?"

    • by Anonymous Coward on Wednesday June 16, 2010 @02:37AM (#32588140)

      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.

      • by houghi (78078) on Wednesday June 16, 2010 @02:50AM (#32588178)

        All the one-person-companies I know are either getting together and form a company or become consultants working for a company. Perhaps that is the reason nobody bids at your projects. They all already have a job.
        When we started looking for a new website for our Belgian company, we got a LOT of Belgians and no Ukrainians. And the Belgians where all companies. Some as small as 2 people, other enourmous. All companies worked with consultants based in Belgium. No idea what nationalities they were.

        So my first guess as to why they do not bid on your project is because they do not need it as they already HAVE a job (and social security and payed holidays and ...)

        And I am half German too. (No idea what the relevance is to anything, but apparently there is some)

        • 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

      • by ultranova (717540) on Wednesday June 16, 2010 @04:39AM (#32588618)

        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.

        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?

        • 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?

          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 t

      • Re: (Score:2, Interesting)

        by Jedi Alec (258881)

        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 o

    • Re: (Score:3, Insightful)

      by purpledinoz (573045)
      And let me tell you, Germans are very burdened by their tax system. Much of their wealth is squandered in government bureaucracy. Do you know that the Finanzamt (the German tax authority) has 110K+ employees? Compare that to the IRS, which has about 100K employees AND the population of Germany is about 1/4 of the US. The Finanzamt is essentially a bloated beast, 4 times the size of the IRS with respect to population.
      • by orzetto (545509) on Wednesday June 16, 2010 @05:31AM (#32588850)

        The Finanzamt is essentially a bloated beast, 4 times the size of the IRS with respect to population.

        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.

        • Let me present a different way of thinking: .....the German VAT goes to the EU Member State government, [same as] sales tax goes to the US Member State government.....

          It's essentially the same organization.

        • by drinkypoo (153816)

          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).

          But not all states in the US even have sales tax. Not all states have income tax, either. Of course, some states, like California, have both, but the simple truth is that it costs more to maintain California for the same reasons that people want to live here. Californians are a majority in California again for the first time in many years because many people aren't willing to foot the bill for a variety of reasons but surely including taxes, and they are leaving. How can one complain? The system is working.

    • That's not true. As a German freelancer working on your own you only need to learn one simple book keeping method (called "doppelte Buchfuehrung"). You can learn it within 3 days from books and there are also plenty of programs to automatize it. I don't claim that German bureaucracy doesn't suck, it does, but it by far does not amount to what the Ukranian government wants to introduce.

  • I guess someone did the math on paid tax income vs the risk of more unknown, unregulated, western influenced groups waiting for the next election.
    http://www.guardian.co.uk/world/2004/nov/26/ukraine.usa [guardian.co.uk] showed what happens when groups can form.
    Best to get them integrated with the state or made illegal.
  • by Chas (5144) on Wednesday June 16, 2010 @01:58AM (#32587968) Homepage Journal

    Guess I was a poet.
    Not that I'd know it.

    This move by the government seems to reek of monumental levels of fail and dumbness.
    Oh well. The Ukraine's loss is someone else's gain.

  • Well, no surprise here. Governments want to get a piece of the Internet. This will drive up outsourcing prices, which drives up the market value of us programmers here in the U.S., at least a little bit.
    • This will drive up outsourcing prices, which drives up the market value of us programmers here in the U.S., at least a little bit.

      Not to worry--I'm sure there are already some inventive U.S. politicians and business leaders hard at work innovating a synergistic solution to this disturbing development.

  • Big deal? (Score:4, Informative)

    by kaunio (125290) on Wednesday June 16, 2010 @02:04AM (#32587988) Homepage

    Is this really such a big deal?

    From my understanding there are many countries in the world that requires a registered commercial organization (and all the required administration that follows) to perform certain kind of jobs.

    Perhaps sad for the Ukrainian people that working internationally becomes more cumbersome but I can also understand that the state want to keep track of what business is conducted from the country.

  • by catmistake (814204) on Wednesday June 16, 2010 @02:11AM (#32588024) Journal
    "Whenever there's danger, a man alone."
    Harry Tuttle
    Dissident Heating Engineer
  • Sigh... (Score:5, Interesting)

    by SolitaryMan (538416) on Wednesday June 16, 2010 @02:15AM (#32588052) Homepage Journal

    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.

    As a ukrainian I can easily guess which option my fellow citizens will choose. And I'm not proud of it...

    • Re:Sigh... (Score:5, Insightful)

      by mobby_6kl (668092) on Wednesday June 16, 2010 @02:19AM (#32588068)

      Also as a Ukrainian (at least, Ukrainian born), I'm proud of the choice most would choose when faced with an oppressive, corrupt government.

      • ... and so did the rest of the orange revolution people. But instead of changing the country they decided to spend 5 years squabbling with each other. Obviously the electorate had enough and voted in a pro russian government.

  • Similar to US? (Score:2, Insightful)

    by ocop (1132181)
    I may be off base on this issue as I know very little about the subject, but is there not a similar law in the US? I seem to recall it being a factor in the relatively recent "lunatic flies a plane into IRS building" incident. If so, perhaps some wealthy and influential Ukrainian contracting firms have their fingerprints (and $$) on the change in law. I bet they are giddy at the prospect of offering a subsistence wage to previously self-employed (and better paid) coders.
    • by pavera (320634)

      No, in the US its perfectly legal to be a stand alone freelance person... The US incentivizes you to become a business entity by offering tax breaks and such. If you are a sole-proprietor in the US your tax rate can be up to twice as high as if you form an LLC or S-Corp, so you are rewarded heavily for incorporating.

      This is exactly the opposite, they are outlawing the low (no?) tax option to drive everyone into a situation where they will pay much higher taxes.

    • Thing is, in the US, you want to have an LLC for the limited liability. That's what I did for a couple years in between real jobs. It was 1 sheet of paper and $110 to set up an LLC in Missouri. Then I just set up a separate checking account for the business.

      In some states, it's cheaper to go S-Corp, but you still have to have a board of directors and quarterly board meetings. My current business is an S-Corp because the filing fees were substantially less in Illinois plus there are multiple investors in

  • So? (Score:5, Insightful)

    by kikito (971480) on Wednesday June 16, 2010 @02:19AM (#32588066) Homepage

    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: (Score:2, Funny)

      by molecular (311632)

      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.

      Why is that law stupid?
      What's to say against requiring someone to keep books so you can tax them correctly.
      No really. I'm a self-employed german and I'm outsourcing book-keeping and tax-filing (it's just too complicated and I would lose more money than it costs if I didn't). That's just the cost of doing business (well, part of it)
      I just got more cost-competitive compared to my ukrainian competition.
      Level playing field -> fair game.

  • by tnmc (446963) on Wednesday June 16, 2010 @02:24AM (#32588084)

    The man is killing the country so he can kiss Putin's ass. Kills me. :(

  • They are trying to limit their exports as every other country is tempted to limit their imports.
  • by SpzToid (869795) on Wednesday June 16, 2010 @02:34AM (#32588126)

    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.

    • Re: (Score:2, Interesting)

      by roman_mir (125474)

      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

      • Re: (Score:2, Insightful)

        by nyctopterus (717502)

        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 "

        • Re: (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 blam

          • Re: (Score:3, Interesting)

            by nyctopterus (717502)

            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.

            • by roman_mir (125474)

              I am the guy that posted the original comment. I am not American, I travel most of my life, I have bank accounts in different countries, my business is in different countries from where my bank accounts are and I spend my money for pleasure in other countries, where I have no business or bank accounts. I live by my principles, money of a state do not matter to me in any way, I hold most money in gold. Cheers.

              • Re: (Score:3, Informative)

                by nyctopterus (717502)

                Sorry man, I have to agree with circletimessquare; you're a parasite. Claiming you're some sort of free-spirit that doesn't really care about money anyway is disingenuous. I suspect yo know that you could earn money (or even spend it!) without the systems and infrastructure that taxing entities provide. You're just trying to justify shirking your obvious responsibilities with some half-arsed attempt at radical libertarianism. Grow up and pay your damn taxes.

        • by roman_mir (125474)

          How the fuck does this outer-libertarian ranting get modded "interesting"?

          - why the fuck wouldn't the above comment be modded "interesting" or "insightful"? It is extremely interesting to see any kind of support of governments and of their spending with our money. You can believe what you believe, and I can believe what I believe and many people find my position interesting and insightful whatever your objections may be.

        • by LynnwoodRooster (966895) on Wednesday June 16, 2010 @07:59AM (#32589550) Journal
          "Anyone may arrange his affairs so that his taxes shall be as low as possible; he is not bound to choose that pattern which best pays the treasury. There is not even a patriotic duty to increase one's taxes. Over and over again the Courts have said that there is nothing sinister in so arranging affairs as to keep taxes as low as possible. Everyone does it, rich and poor alike and all do right, for nobody owes any public duty to pay more than the law demands." - Judge Learned Hand [liberty-tree.ca]
      • by Kjella (173770)

        If you followed that to the ultimate conclusion then there'd be no taxes, no government or any other public function. Failed states like Somalia is your ideal. Every society since the dawn of civilization has had shared resources and shared responsibilities, the only difference is that with money we're now taking it in through taxes instead of labor. Extreme libertarians like you are essentially anti-democratic, because you reject any authority the people (demos) has. You demand the right to live among a pe

        • by roman_mir (125474) on Wednesday June 16, 2010 @07:22AM (#32589334) Homepage Journal

          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.

          • by radtea (464814) on Wednesday June 16, 2010 @10:28AM (#32590934)

            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: (Score:3, Informative)

            by IICV (652597)

            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 kind of doubt that; what you're advocating will create a gigantic power vacuum where the government used to be, and you're proposing that it will just stay that way without anyone stepping in and filling it. Sorry, but nature abhors a va

            • Re: (Score:3, Insightful)

              by roman_mir (125474)

              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 g

    • Re: (Score:3, Insightful)

      by NNKK (218503)

      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 worth

      • by SpzToid (869795)

        Please do not be offended, as I only wrote of audit-able record-keeping, not of a requirement for a full-time book-keeping employee. This simply means producing an invoice for the client, and an audit-able paper-trail of earnings.

        Using the example of Amsterdam, where prostitution remains legal to this day and trade unions exist, everyone involved must still pay taxes. Money laundering is illegal. As I understand, this has also diminished another serious issue: human trafficking.

        So an I.T. worker must provid

        • Re: (Score:3, Informative)

          by aaarrrgggh (9205)

          Accurate accounting of income is easy for a small/one-man show. Expensesare another matter altogether, which is what the US is moving to. If you have $200k in gross income and have non-trivial expenses, your average expense size might be $20, but inncomewould usually be one or two orders of magnitude higher.

          We have a full-time book keeper and quarterly CPA reviews... But our expenses are tracked primarily by credit card statements. Individual transaction tracking would require us to spend 15% of our sala

  • No stinking taxes (Score:4, Informative)

    by Fartypants (120104) on Wednesday June 16, 2010 @02:38AM (#32588144)

    The problem is that the majority of Ukrainian freelancers already work illegally.

    Corporate entities have a far higher tax payment rate than individuals, especially in the internet sphere where freelancers don't have physical office space or physical deliverables that can be tracked by authorities. Furthermore, individual entrepreneurs providing internet-based services in Ukraine make it hard for the tax-paying corporate entities to compete.

    This has become important because Ukraine is set to receive from $19-20 billion from the IMF in the next two and a half years if they can show that they are making progress in reducing their budget deficits, so there's a lot of incentive to try to push tax payments up.

    • Re: (Score:3, Informative)

      by Stoutlimb (143245)

      As someone who has used Ukrainian freelancers in the past, none of the workers I used chose to do things legally. I asked them why, and they said all the taxes and bureaucracy were so odious. Going legit was just not financially viable for them, even though I was paying them the local equivalent of executive level wages. The tax and legal system in Ukraine is so broken, that it's common knowledge that the best way to screw yourself is to try to go legit. All it does is open the door to half a dozen "ins

  • if you are already doing freelance work, it means you already have connections, resume, and the experience to show for it. leave the country. that will teach them, VERY badly.
    • by Fartypants (120104) on Wednesday June 16, 2010 @03:21AM (#32588298)

      if you are already doing freelance work, it means you already have connections, resume, and the experience to show for it. leave the country. that will teach them, VERY badly.

      Right... so, let them eat cake, basically.

      It's difficult to move even to a different city in Ukraine (you need a residence permit). As far as going to work in a different country, the entire international system is basically designed to prevent that. And it's not as if the world is your oyster... Your choices for visa-free travel as a Ukrainian are the former Soviet Union (except the parts that are now EU members) and that's it. You can pick up temporary visa's in-country in Egypt, Syria, Jordan, Thailand and Vietnam.

      And nobody gives work visas for freelancers, so you'd be working illegally anyway.

      • by unity100 (970058)
        first, enroll in a headhunting program. there are many job agencies that distribute jobs, and take your first few salaries. by jobs, i mean on-site jobs, contracted, salaried.

        then the foreign company you are to work in can get your visa, and you can get out of ukraine.
      • by FuckingNickName (1362625) on Wednesday June 16, 2010 @04:42AM (#32588634) Journal

        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.

  • Oblig. (Score:4, Funny)

    by SeaFox (739806) on Wednesday June 16, 2010 @03:01AM (#32588226)

    In Soviet Russia, outlaws work for YOU!

  • Companies don't like dealing with individuals. I work as a one-man limited company as this is the only way most clients are prepared to deal (they are concerned that if I freelanced for them, they would become liable for any tax I avoided paying, plus holiday pay, pension and a period of notice). I have to fill in an online VAT return every 3 months and online tax returns. Once a year I have to update my company's official listing and submit an end-of-year financial report - which involves buying an account
  • So? (Score:5, Informative)

    by Aceticon (140883) on Wednesday June 16, 2010 @03:17AM (#32588280)

    I work in the UK as a freelancer in IT and I need to have my own company, pay taxes and have an accountant.

    I used to work in Holland as a freelancer in IT in there I needed to ... you guessed it ... have a company and an accountant.

    Even if you don't want to have your own company, there are in fact schemes like "Umbrela Companies" which are in fact accountant managed companies who will temporary "employ" the freelancers and pass them all the income from their contracts minus tax and their part of corporation costs. These are however less tax efficient (you are taxed as an employee and income usually pays more taxes than dividends or capital gains) than just having your own company.

    I'm sure Ukraine has some smart accountants who would love to setup some scheme like this.

    Somehow I suspect that the real concern here is that freelancers will have to start paying real taxes like everybody else (my hearth weeps) instead of getting their roads, schools and law-enforcement for free.

    • I work in the UK as a freelancer in IT and I need to have my own company, pay taxes and have an accountant.

      There is nothing in UK law that forces any of this (apart from paying taxes) on you. It may provide you with limited liability or tax advantages, but its still your decision.

      In addition, it is comparatively cheap and easy in the UK.

      • There is nothing in UK law that forces any of this (apart from paying taxes) on you. It may provide you with limited liability or tax advantages, but its still your decision.

        Umm, IR35?

      • Re: (Score:3, Informative)

        by horza (87255)

        Not sure why Aceticon is +5 Informative, the parent is correct that you do not need to have your own company or have an accountant in the UK. You can simply declare yourself as self-employed (Sole Trader) to HMRC. Your earnings are then directly taxed as income.

        As the_womble says, it is cheap to set up a limited company, you can have it done for around $50, and even then you still do not need an accountant. It is quite simple and straightforward to do everything yourself.

        Aceticon may suspect what he wants,

    • by RMH101 (636144)
      I just opened this post and did a search for "umbrella" as this was my first thought, too. In the UK it's very common since the IR35 legislation removed a lot of freelancer benefits. One company sets up large umbrella company and puts you on their payroll. You as a contractor get paid by them, and they do your accounts. Simples
    • I think you're confusing a true freelancer with a contractor. While laws like IR35 affect the latter, a freelancer should be doing work for many clients simultaneously under their own rules, and do not need a Ltd company or an accountant (if they don't want to).

  • by Krneki (1192201)
    Work illegally and apply for social support.
  • It could be worse, they could have implemented something like IR35.

  • 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.

    Four options. That's one each!

  • Seems to me this is a good thing. I've heard a lot of talk lately about how programming isn't regulated in any way, you don't need a degree or certification, etc etc. Any hack can jump on a keyboard and claim to be a programmer. There's no industry-wide way to determine if your new coder is a hack or an artist.

    For hacks and newbies, that's a great thing. It lets them land a job. For professionals and companies, it's a pain in the ass.

    Now, in the Ukraine, they still don't require any actual certificatio

  • They talk of Internet start-ups? Do we need another tweeter or facebook? Internet revolution is over. Everything is there: communication, JPGs, videos, shopping carts, databases, maps, etc.

    Now we have to put products and services online in earnest, it means hard tedious work at the existing physical businesses.

    But the new revolution is commencing in robotics. Computers are getting sensors (web-cams, mikes, etc.) and begin to move.

    I recently started learn to to program a Parallax's educational robot. This th

  • All these comments, and all I see is how people want to be an island, It's really easy. form a cooperative that meets the laws freelance under the cooperative profit
  • I am curious as to why such legislation would get proposed.

    Is there massive tax evasion by freelance IT workers, that is far an about other industries?

    Are the problems of quality or fraud that would lead the government to want to discourage freelance IT work?

    • Re: (Score:2, Insightful)

      by Anonymous Coward
      Posting anonymously for obvious reasons.

      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

  • Similar in Brazil (Score:4, Informative)

    by acid06 (917409) on Wednesday June 16, 2010 @08:12AM (#32589628)

    And it has been so for a long time so, unfortunately, there isn't much of a freelance IT industry around here.

    The problem people from countries such as the US and the UK don't seem to understand is that setting up an actual company in Brazil (and I imagine Ukraine to be similar) is that it's a HUGE hassle. By that I mean it's a 2-3 month process, involving more than 10 different government institutions you need to visit in person. You need to get a proper "commercial address", which can't be your home (unless you re-register it as a commercial building, which is another hassle and pays much higher property taxes).

    When I worked as a freelancer, I did the math and I would pay about 25% of my earnings in fees and accounting. Then, I would pay income tax (progressive scale which tops at 27.5%) on the remaining 75%. Also, as a freelancer, I would need to pay 20% to social security instead of the regular 11%.

    In short, I would end up with roughly ~50% of what I earned. Then I would proceed to buy goods which were already taxed to hell and my purchasing power would be effectively cut in half again (the cheapest Honda Civic here costs US$37K).

    I just restricted to working only to foreign companies. The pay was better *and* I wouldn't need to register myself as a company to do that, as the tax code has general provisions for "money from foreign countries". The consequence is that it was very difficult to prove my income whenever needed (home financing, etc), as everything here requires a "regular" proof of earnings.

    From my personal experience, I can say that, yes, this is bad news for Ukrainians.

  • Good (Score:3, Funny)

    by genner (694963) on Wednesday June 16, 2010 @11:55AM (#32591820)
    Now if India and China get on board with the idea I'll be able to get some work.

"Everything should be made as simple as possible, but not simpler." -- Albert Einstein

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