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In Ukraine, IT Freelancing Under Threat

kdawson posted more than 4 years ago | from the intended-consequences dept.

Businesses 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."

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359 comments

Jews for Nerds (-1, Troll)

Anonymous Coward | more than 4 years ago | (#32587902)

New Jewish dating site launches.

Jews for nerds [jewsfornerds.com]

Let me get this straight... (5, Informative)

Anonymous Coward | more than 4 years ago | (#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.

Re:Let me get this straight... (1)

shutdown -p now (807394) | more than 4 years ago | (#32588106)

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

I seriously doubt that - have you got any references?

Re:Let me get this straight... (2, Insightful)

worx101 (1799560) | more than 4 years ago | (#32588238)

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.

Re:Let me get this straight... (1)

molecular (311632) | more than 4 years ago | (#32588446)

from http://en.wikipedia.org/wiki/Tax [wikipedia.org] :

Today, one of the most complicated taxation-systems worldwide is in Germany. Three quarters of the world's taxation-literature refers to the German system. There are 118 laws, 185 forms, and 96,000 regulations, spending €3.7 billion to collect the income tax.

IRS (4, Informative)

gd2shoe (747932) | more than 4 years ago | (#32588840)

I may be comparing apples to oranges, but...

The IRS costs apx $12 billion [gao.gov] , has 1142 "Forms and Instructions" [irs.gov] (most seem to be forms). The law is reported to be 3,387 pages itself accompanied by 13,458 pages of regulation spread across twenty volumes.(http://www.trygve.com/taxcode.html)

And that's just the federal tax code. We also must worry about individual state and local tax codes, many of which are nearly as bizarre and convoluted as the federal ones. Definitions frequently differ between the IRS and state agencies.

Re:Let me get this straight... (1)

Lord Lode (1290856) | more than 4 years ago | (#32588676)

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

Re:Let me get this straight... (1)

Uzver (1321773) | more than 4 years ago | (#32589050)

Do you know guys about 'Doing Business' book (by IMF?) which is publishing every year? It says that Ukraine Tax System got 181 place out of 183. I've also learned that stuff... and I agree with them... too many tax periods and forms... >100 payments per year. Ukrainian Tax Laws changed since 1997 over 100-200 times (very long list)! Tax accounting IS TOTALLY INCOMPATIBLE with IFRS. Tax administrator is pressing enterprises everyday to hide their losses in declarations and pay the money /It's real Mafia/

Re:Let me get this straight... (4, Insightful)

dunkelfalke (91624) | more than 4 years ago | (#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?"

Re:Let me get this straight... (4, Interesting)

Anonymous Coward | more than 4 years ago | (#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.

Re:Let me get this straight... (3, Informative)

houghi (78078) | more than 4 years ago | (#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)

Re:Let me get this straight... (1)

MadKeithV (102058) | more than 4 years ago | (#32588230)

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.

A sizeable tax base that pays no taxes at all is still no taxes... I don't know what the indirect taxes are like in the Ukraine though, perhaps it *is* better for them to have no direct taxes and only indirect (VAT/Sales tax) type stuff.

Re:Let me get this straight... (1)

zippthorne (748122) | more than 4 years ago | (#32589130)

Yeah, but a sizeable tax base that takes care of it self doesn't really need the things that government takes their money for to begin with. You don't need entitlements if you have a decent job, after all.

Re:Let me get this straight... (5, Insightful)

ultranova (717540) | more than 4 years ago | (#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?

Re:Let me get this straight... (1, Insightful)

Anonymous Coward | more than 4 years ago | (#32588712)

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... (4, Informative)

digitig (1056110) | more than 4 years ago | (#32588816)

For reference, the tax theory in question is the Laffer curve. The idea is that at 0% tax the tax revenue is 0, and at 100% tax the tax revenue is zero (because it's not worth anybody's while to work within the system), so the optimum level of tax must be somewhere in-between. The interesting thing about this theory (aside from the fact that it assumes only a single independent variable) is that it is only ever trotted out to suggest that taxes are too high and that lowering them will increase revenue. Never to suggest that taxes are too low and that increasing them will increase tax revenue, although unless somebody has successfully plotted the curve (nobody has) then it supports either theory just as well (unless you are already at the 0% or 100% point). The original "lowering taxes grows the economy and thus increases the tax base" is just wishful thinking without a solid economic model and knowledge of where you are in that model. Oh, and for "tax revenue" you can substitute pretty much any measure of economic success you like. All this economic model actually predicts if that lowering taxes might grow the economy, might shrink it, or might leave it the same.

Re:Let me get this straight... (0, Informative)

Anonymous Coward | more than 4 years ago | (#32588966)

I'm guessing that with combined taxes exceeding 50% of your income, we're on the far side of that curve. Oh, lowering taxes has worked every time to *increase* revenue. Check Kennedy, Reagan, and yes, Clinton (after 1994 election). You could make the case that the lowering of capitol gains tax under Clinton helped start the .com boom. Raising taxes always depresses the economy. If the economy is strong it can handle the increase; however, increasing taxes in a weak economy is never a good idea. If you don't believe that, wait until 2011 when one of the largest tax increase in US history kicks in (& No, I'm not talking about health "care"--that's in addition!)

Re:Let me get this straight... (2, Interesting)

Jedi Alec (258881) | more than 4 years ago | (#32588720)

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:Let me get this straight... (0)

Anonymous Coward | more than 4 years ago | (#32588922)

>

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.

That indicates that you cannot afford German developers.

And no offence meant, I guess most Germans pay happily more taxes for Germany not being Ukraine. In fact, all eastern Europeans from non-EU countries, who I've met, were very unhappy about the situation in their countries.

Re:Let me get this straight... (2, Insightful)

purpledinoz (573045) | more than 4 years ago | (#32588252)

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.

Re:Let me get this straight... (1)

molecular (311632) | more than 4 years ago | (#32588454)

The Finanzamt is essentially a bloated beast,

Yes, and let me tell you: it's carnivorous, relentless and hungry! Will someone save our childen! *runs*

Re:Let me get this straight... (4, Insightful)

orzetto (545509) | more than 4 years ago | (#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.

Re:Let me get this straight... (1)

aaaaaaargh! (1150173) | more than 4 years ago | (#32588622)

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.

Floundering (-1, Redundant)

KeensMustard (655606) | more than 4 years ago | (#32587936)

Should I be happy or sad? Really this post like random statement of trivial facts e.g I heard on the radio that it was sunny in Minsk today ?!?

Simple solution (1, Insightful)

Anonymous Coward | more than 4 years ago | (#32587942)

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.

Under threat (0)

Anonymous Coward | more than 4 years ago | (#32587948)

When I read the headline, I was picturing a scene from the movie Swordfish where they simulated a stressful situation for the main character (..you know the one I'm talking about), and I was all like "With job perks like that, maybe it's time to move to Ukraine!"
But after I read the summary, it seems that is the opposite of what one would want to do.

Got my hopes up for nothing..

Ukrainian entrepreneur vs state? (1)

AHuxley (892839) | more than 4 years ago | (#32587962)

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.

Upcoming brain drain...from the Ukraine? (2, Funny)

Chas (5144) | more than 4 years ago | (#32587968)

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.

Good for U.S. Programmers (2, Interesting)

PerlPunk (548551) | more than 4 years ago | (#32587970)

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.

Big deal? (4, Informative)

kaunio (125290) | more than 4 years ago | (#32587988)

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.

Eliminate the little guy (0)

Anonymous Coward | more than 4 years ago | (#32589034)

This is effectively no different than a corporate giant filing a bullshit lawsuit against a small mom & pop, not to win, but simply to drain their resources until they disappear.

The intention here is the same: eliminate the competition, not by providing a better service or product at a better price, but by exploiting the corrupt system of law.

start working illegally (2, Insightful)

catmistake (814204) | more than 4 years ago | (#32588024)

"Whenever there's danger, a man alone."
Harry Tuttle
Dissident Heating Engineer

Re:start working illegally (1)

Cornwallis (1188489) | more than 4 years ago | (#32588808)

Bravo to you catmistake. My favorite line from my favorite movie!

one name: (0, Offtopic)

ChipMonk (711367) | more than 4 years ago | (#32588050)

Terry Childs

Sigh... (4, Interesting)

SolitaryMan (538416) | more than 4 years ago | (#32588052)

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... (4, Insightful)

mobby_6kl (668092) | more than 4 years ago | (#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.

Re:Sigh... (2, Insightful)

JockTroll (996521) | more than 4 years ago | (#32588296)

Do you mean, wring their hands, cave in and get over it? Because that's the trend lately.

Re:Sigh... (-1, Troll)

Anonymous Coward | more than 4 years ago | (#32588558)

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

Would that be: stop doing freelance work, conforming, start working illegally or leave the country? Judging from the fact that you call yourself "Ukrainian born" I'm guessing it's the last option and it's nothing to be proud of. Now staying and fighting oppression, bureaucracy and government stupidity, that's something to be proud of.

Victor Yushenko had his chances... (1)

Viol8 (599362) | more than 4 years ago | (#32588862)

... 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.

Re:Victor Yushenko had his chances... (1)

Uzver (1321773) | more than 4 years ago | (#32589102)

>But instead of changing the country they decided to spend 5 years squabbling with each other. Yeah. Instead of working they were talking and talking. And a new prorussian government is going the same way btw. Many faces... which is saying good things to everyone and doing the opposite.

Re:Sigh... (1, Interesting)

Anonymous Coward | more than 4 years ago | (#32588244)

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...

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.

Similar to US? (2, Insightful)

ocop (1132181) | more than 4 years ago | (#32588064)

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.

Re:Similar to US? (0)

Anonymous Coward | more than 4 years ago | (#32588190)

No. You have to pay taxes once a year on any money you make, but they're pretty easy to figure out. You have many options, too (I'm in US, single person, own five small companies (1 C-corp, 2-S-corps, 2-LLC's* in two states; THAT'S pretty complex, but just paying self employment taxes isn't.) The US is the best country in the world to start a business (according to some US magazine) and perhaps surprisingly Israel was #2.

* (why so many? it's complicated, but has to do with asset management and tax reduction for different types of entity. I've gotten pretty good at it, but I still get burned by the IRS occasionally.) Also, some US states are better than others. Wyoming, Texas, and Nevada are all pretty good. California, Delaware, and NY are all bad. (But even those are probably better than almost any other country in the world.. EU combined tax rates are insanely high.)

My Texas tax rate for all income on my S-corps is simply my federal tax rate. Last year, about $450k (it was an exceptionally good year) means about $67k in actual taxes owed in total (IRS and state). you do the math on what that tax rate was. For a highly developed first-world country, that's exceptional... taxes in the EU would consume so much that I'd have little left to grow my businesses.

TX has no state income tax for individuals or corporations, and franchise taxes don't kick in until you make more than $1M (and then they're capped at just 1%.) Wyoming has NO taxes at all -- personal, franchise, corporate -- on any real property or income owned or generated outside the state except for a $50/yr corporation fee.

LLC's are great for holding intellectual property. S-Corp's are great for operating small companies, and C-Corp's are great if you plan to save some money in your business for many years before using it.

Re:Similar to US? (1)

pavera (320634) | more than 4 years ago | (#32588228)

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.

Re:Similar to US? (1)

ducomputergeek (595742) | more than 4 years ago | (#32588548)

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 involved. Issuing stock was the best choice there.

Re:Similar to US? (0)

Anonymous Coward | more than 4 years ago | (#32588984)

You can incorporate, do an LLC, or an S-Corp. However, you can do the work on your own not as a company as long as you declare it on your taxes at the end of the year. The companies you work for should give you a 1099 at the end of the year. The downside is you will pay double in SS and if you make too much, you will have to file every 3 months the next year. The corporation is there to protect you from some taxes and being sued for your personal assets.

So? (5, Insightful)

kikito (971480) | more than 4 years ago | (#32588066)

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:So? (2, Funny)

molecular (311632) | more than 4 years ago | (#32588494)

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.

"Professor killing Ukraine (3, Interesting)

tnmc (446963) | more than 4 years ago | (#32588084)

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

Re:"Professor killing Ukraine (4, Insightful)

shutdown -p now (807394) | more than 4 years ago | (#32588118)

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:"Professor killing Ukraine (1)

ElusiveJoe (1716808) | more than 4 years ago | (#32588904)

What the heck is 'Interesting' in this comment? I'm not fond of Putin, but what does he have to do with Ukraine? Why 'killing' Ukraine is beneficial to the Russian government?

Looks like another nationalistic rant to me.

Whats the reverse of protectionism,destructionism? (2, Informative)

cacba (1831766) | more than 4 years ago | (#32588086)

They are trying to limit their exports as every other country is tempted to limit their imports.

Re:Whats the reverse of protectionism,destructioni (1)

molecular (311632) | more than 4 years ago | (#32588498)

extreme altruism

Panama... (1, Funny)

Anonymous Coward | more than 4 years ago | (#32588122)

Panama never looked so good.

It worked to stop Al Capone (2, Interesting)

SpzToid (869795) | more than 4 years ago | (#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:It worked to stop Al Capone (2, Interesting)

roman_mir (125474) | more than 4 years ago | (#32588164)

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:It worked to stop Al Capone (1, Insightful)

Anonymous Coward | more than 4 years ago | (#32588356)

> 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 (1)

Anonymous Coward | more than 4 years ago | (#32588870)

Not only do you pay for the "free" stuff, you also pay the government overhead. And you don't have any choice!

You are like that Auschwitz dude: "I don't mind, because the food's free and the trains run on time."

Re:It worked to stop Al Capone (2, Insightful)

nyctopterus (717502) | more than 4 years ago | (#32588422)

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:It worked to stop Al Capone (2, Interesting)

FuckingNickName (1362625) | more than 4 years ago | (#32588524)

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:It worked to stop Al Capone (2, Interesting)

nyctopterus (717502) | more than 4 years ago | (#32588766)

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 (0)

Anonymous Coward | more than 4 years ago | (#32588798)

Every company in the world has large groups of people whos entire job is dedicated to figuring out how to NOT pay taxes or pay as little as possible. And in many cases ignore the tax outright as the fees and fines will be less than the tax itself.

Why should it be any diffrent for an individual?

Re:It worked to stop Al Capone (1)

nyctopterus (717502) | more than 4 years ago | (#32589086)

I don't think what they do is in any way a duty, and in many cases I think it is immoral. "But the companies do it" is a pathetically weak excuse.

That said, I am for a drastically simplified tax system, where there is no such thing as a tax deduction for businesses. You pay a certain (reduced) amount of tax, and that's it. No jiggery-pokery, no getting all of it back because of expenses, or losses, or whatever bullshit they make up to avoid tax now. In a free market, the cost of running your business is the cost of running your business. To compete, reduce your costs, not your tax kung-fu.

Re:It worked to stop Al Capone (1)

Kjella (173770) | more than 4 years ago | (#32588896)

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 people, yet you refuse to obey democratically passed laws. Public property is our collective property, if you don't want to be part of that collective then fine by me but don't trespass. Let's see how long you'd last...

Re:It worked to stop Al Capone (2, Insightful)

NNKK (218503) | more than 4 years ago | (#32588172)

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:It worked to stop Al Capone (1)

SpzToid (869795) | more than 4 years ago | (#32588276)

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 provide the client with an invoice and somehow manage books to show how these invoices get paid into accounts receivable. If they want to take deductions allowed, they can also maintain accounts payable and figure things out.

This might reduce Ukranian mafia inspired bot-nets, for example.

Seems reasonable. I keep books myself in multi-lingual, multi-currency Gnucash that accepts MT940 transaction downloads from my bank, and I pay an auditor to inspect my books and file for me at the end of the year. I think everyone else should have to be ready for an audit as well. Seriously folks, accounts receivable/payable ain't rocket science. After years of suffering through the misery of Intuit Quicken, I really like GnuCash,and am proud of my books. Also www.mint.com is supposed to be a no-brainer in terms of difficulty, but I think they got bought-out by eViL Intuit. Whatever works for you.

Someone on the Slashdots wrote in their sig they liked taxes, because they used taxes to buy civilization. Seems reasonable, and preferential to anarchy. I think the Ukranian government is acknowledging that I.T. workers ain't exactly like waiters and waitresses collecting cash tips.

Re:It worked to stop Al Capone (1)

cacba (1831766) | more than 4 years ago | (#32588186)

Since we cant trust people to report their own earnings properly how can we trust these single person accounting firms. More audits for those who do not use the big 5? Oh wait, after enron it was 4. Damn who can we trust again?

Re:It worked to stop Al Capone (0)

Anonymous Coward | more than 4 years ago | (#32588830)

Expecting everyone doing legal business is OK. But the changes brought by this new tax codex essentially makes it harder to do for many IT freelancers in Ukraine.

Essentially, now you could pay single fixed tax (of 200 hrivnas) while you freelance. But with new tax codex you'll have to pay about 4 different % based taxes (which is way more more than now in money and time value). Also if yo don't want to spend about half of your time on bookkeeping and paperwork you want to use outsourced accountant services. Oh, wait... You can't really do that. Because accountants and bookkeepers can't freelance too now. You either hire one (and pay 4 more taxes on employee which takes even more time and money) or give everything you earn to big companies who can do outsourced accounting for you legitimately.

So, I guess this is the promised by Yanukovich support of small business...

Notice anything? (1, Interesting)

Renegade Iconoclast (1415775) | more than 4 years ago | (#32588134)

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:Notice anything? (2, Insightful)

LordAndrewSama (1216602) | more than 4 years ago | (#32588638)

As a programmer, I speak for all of myself and no-one else. but let me say this: fuck unions. fuck them. Seriously. If a company starts treating me like shit, I find a new job and they lose my skills. what's difficult about that? Even if I can't line up a new job instantly, I'll survive. I'll do freelance work(heh, I'm not ukranian) or become a taxi driver or something if I run out of savings while jobhunting.

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...

No stinking taxes (4, Informative)

Fartypants (120104) | more than 4 years ago | (#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:No stinking taxes (1)

cacba (1831766) | more than 4 years ago | (#32588218)

You realize you pay tax on profits, not revenue. This affects how much money your are making not if your making money. Though this does affect the amount of investment done in the future.

Leave the country. (1)

unity100 (970058) | more than 4 years ago | (#32588202)

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.

Re:Leave the country. (1)

cacba (1831766) | more than 4 years ago | (#32588232)

Have you looked at their population graph, they arent learning.

Re:Leave the country. (5, Informative)

Fartypants (120104) | more than 4 years ago | (#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.

Re:Leave the country. (1)

unity100 (970058) | more than 4 years ago | (#32588332)

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.

Re:Leave the country. (4, Insightful)

FuckingNickName (1362625) | more than 4 years ago | (#32588634)

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. (3, Funny)

SeaFox (739806) | more than 4 years ago | (#32588226)

In Soviet Russia, outlaws work for YOU!

For professionals, not a big deal (1)

petes_PoV (912422) | more than 4 years ago | (#32588260)

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 accountant for a day.

It's not a killer and takes zero time on a daily basis. If I was concerned about the 1 hour a month the paperwork takes, I could contract it out - at an exorbitant rate. The benefits this way of working brings is that I have "respectability", my clients feel more comfortable and some accountants get work.

So? (5, Informative)

Aceticon (140883) | more than 4 years ago | (#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.

Re:So? (0)

Anonymous Coward | more than 4 years ago | (#32588572)

Nah.
You miss the point.

Vice premier minister Tigipko was one of the guys behind this new tax codex.
And, SUDDENLY, Tigipko's wife starts a large venture fund for startups.

Pure coincidence, surely.
And everything will go nice and civilized way - competition, tax advisors, as Ukrainian government has a long, clean trail of being non-corrupt.

Nice to live in your shoes.

Re:So? (1)

the_womble (580291) | more than 4 years ago | (#32588806)

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.

Re:So? (0)

Anonymous Coward | more than 4 years ago | (#32589124)

There is nothing in UK law that forces any of this (apart from paying taxes) on you

You an accountant? When IR35 came alone, sole-traders in IT stopped instantly.

Re:So? (1)

DavidpFitz (136265) | more than 4 years ago | (#32589134)

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:So? (1)

RMH101 (636144) | more than 4 years ago | (#32588826)

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

Re:So? (1)

Peter Cooper (660482) | more than 4 years ago | (#32588834)

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).

Choices choices (1)

Loki_666 (824073) | more than 4 years ago | (#32588294)

"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."

Well, call me cynical but as probably 99% of them already do not declare their work and tax its not really going to affect anyone. They will just continue working illegally. (Speaking from experience of living in Russia here close to the Ukraine)

a great disturbance in the Force... (0)

Anonymous Coward | more than 4 years ago | (#32588302)

as if millions of automatic spam email servers, v14gr4 ad servers, money laundering mafia scammers, and a bunch of incompetent code kids that do code jobs for 100 bucks and push the salaries of real programmers down, suddenly cried out in terror, and were suddenly silenced...

Re:a great disturbance in the Force... (1)

MadKeithV (102058) | more than 4 years ago | (#32588364)

That is unfortunately way oversimplified.
I know many "serious" developers, working for various companies outside the Ukraine, that are all employed under the "freelance" statute. This is going to hurt outsourcing around here quite a bit.

I have an idea (0)

Anonymous Coward | more than 4 years ago | (#32588368)

Why not just show them http://www.dublinetwork.com? I'm pretty sure that would please the Ukrainian government, they're a company after all.

Laws may be harsh here, but not mandatory (0)

Anonymous Coward | more than 4 years ago | (#32588380)

I live in Ukraine and actually I don't give an fsck at the moment.

I work for a living in a quite big IT outsourcer, so all my taxes are already paid for me - I honestly don't care.
I do an IT gigs from time o time and I get paid in cash (no national currency, please, but normal, world-wide used green monies).

If my situation changes, I'll work illegally or leave the country.

And yes, voting out these bastards is a no-option - there is no choice, they are all the same (having seen all major political powers being in charge, I can say it).

Easy (1)

Krneki (1192201) | more than 4 years ago | (#32588496)

Work illegally and apply for social support.

Re:Easy (1)

Hognoxious (631665) | more than 4 years ago | (#32588824)

Move to the UK, claim asylum, work illegally and apply for social support.

FTFY.

The smart thing to do... (1)

jdigriz (676802) | more than 4 years ago | (#32588526)

Would be for the freelancers to form a company called "Amalgamated IT" or "Federated Freelancers" or something and share *one* bookkeeper between the lot of them. That will reduce the regulatory burden to the bare minimum on each of them, they all contribute a small amount to the maintenance of the bookkeeper, and basically continue business as usual. Maybe hire another one if the first gets too overwhelmed with the amount of bookkeeping, after all, there are advantages to delegation.

Did they hire Gordon Brown (1)

Hognoxious (631665) | more than 4 years ago | (#32588734)

It could be worse, they could have implemented something like IR35.

That's neat (1)

Hognoxious (631665) | more than 4 years ago | (#32588880)

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!

Professionalism (1)

Aladrin (926209) | more than 4 years ago | (#32588914)

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 certification, but they do require that the person be serious enough to set up a business. It's something, at least.

Re:Professionalism (1)

JockTroll (996521) | more than 4 years ago | (#32589082)

"There's no industry-wide way to determine if your new coder is a hack or an artist."

There is. If your shit is valid, everybody will download it. If it's not, you go and work for some big company.

I predict... (0)

Anonymous Coward | more than 4 years ago | (#32588972)

I predict a sudden rise in freelance bookkeepers offering their services to freelance IT consultants.

Seriously, does it say anywhere that you have to hire your own bookie who works only for you, or does it just say you need to have one to handle the legal side of finances?

Options? (0)

Anonymous Coward | more than 4 years ago | (#32589004)

What about joining an existing company?
What about creating a cooperative company with other people in the same situation?
Sounds too much sensationalist to me!

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