Government to the Court: Pension Contribution for Private Entrepreneurs is Raised Illegally

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Government to the Court: Pension Contribution for Private Entrepreneurs is Raised Illegally


New rules for single tax payers are valid from the 1st of May 2009. Private entrepreneurs are illegally forced to pay extra money to State Pension Fund. Law Firm's attorney-at-law Andrii Nechyporenko brought a case before the court against the Government. The sum of insurance contribution is from 123 HRN monthly. Oksana Prodan who is the head of Cabinet of Minister’s Business Council claims that it’s not a great sum of money and everyone has to pay it for having pension in future:

“It’s obligatory to pay if you want your years of pensionable service to be included in the aggregate. Without such payment transactions your years of pensionable service won’t influence the pensionable amount at all”.

The Cabinet of Ministers of Ukraine overstepped authority and violated Constitutional norms and Ukrainian laws, by issuing a decree # 366 on the 14th of April 2009 “On Paying Pension Tax by Individuals for Obligate State Pension Insurance by Private Entrepreneur, Who Chose to Pay Particular Kind of Taxation”.

State government bodies have to act only intra vires which are determined by Constitution and Ukrainian Laws. There is no law which gives a right to the Cabinet of Ministers to decree following:

  • contribution rate to the State Pension Fund of Ukraine for individuals - private entrepreneur;

  • an obligation to pay a contribution for private entrepreneur;

  • the procedure of accrue charge and payment of insurance contribution to the State Pension Fund of Ukraine.

The Supreme Council of Ukraine is the only one authority which can fix the amount of insurance contribution, including that ones which are sent to Saving Fund, according to part 1 article 18 of Ukrainian Law “On Obligatory National Pension Insurance”.

Private entrepreneurs, who pay single tax, has to pay insurance contribution as a flat amount, which is not fixed in any Ukrainian law, except Presidential Edict “On Simple System of Taxing, Registration and Accounting for Small Business”, which has the power of the law according to the norms of Constitution. According to this document 42 % of the single tax amount go to the State Pension Fund of Ukraine.

“In that way a Cabinet of Ministers wants to fulfill state budget of Pension Fund in global crisis. I suppose, no one likes when someone cynically picks his pocket and illegally force to pay more. And it doesn’t matter how much you should pay. It’s about principle – about the law,” – attorney-at-law Andrii Nechyporenko says in the interview on TV channel CTV, news “Vikna-Novyny”.

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