Gorb  E., Mudrenko A. A.

Oles Honchar Dnipropetrovsk National University


Nowadays the problem of small business establishment and development in Ukraine is topical. Private entrepreneurs face many barriers that exist in the legislation, the tax system and other aspects of business. According to the rating “Doing business” Ukraine has moved down to 152 place, having lost three positions. It is between Liberia and Venezuela in the rating. To compare with the other post-Soviet countries, Russia takes the 120th place, Moldova – 81, Belarus – 69, Poland – 62. About 35% of the working age population is engaged in small business. The contribution of small business to GDP hasn’t exceeded 10% in recent years, whereas in most countries it accounts for 50-60%.

The first problem is the impaсt of the control authorities on the Ukrainian business. The tax system, the customs, and other control authorities are making business more and more complicated. Domestic and foreign entrepreneurs often run into problems such as queues at the customs, bureaucracy that lead to large losses. Tax Code of Ukraine, which came into force on 1st January 2011, has put more pressure upon small businesses, in addition to a series of innovations that have reduced the possibility of cooperation between small and large enterprises.

Next problem is corruption. Ukraine is a leader on this indicator in international ratings. An amount of bribes can exceed initial capital, causing the collapse of the business or doesn’t even allow it to be established. As a result, in Ukraine small and medium businesses have been minimized: according to the State Tax Administration, in 2011, 245.8 thousand entrepreneurs dissolved their companies. At the same time only 176.7 thousand private companies were registrated. As a result, 70 thousand people is the net annual outflow from the country’s business. In the 20-year history of Ukraine it is the first case of a negative balance of entrepreneurial activity.

Another problem for the Ukrainian business is active government regulation of the entrepreneurial activity. The success of the business depends on the relationship with the government, which is illegal in the European countries. "Ukraine's policy aims to reduce the number of jobs, reduce employment, and, in fact, it brakes the Ukrainian economy" – said the head of the Association of Ukrainian Banks Oleksandr Sugoniatko.

In Ukraine, there is a high level of raid. Attacks on businesses are growing, and the lack of an effective protection mechanism slows down business development. In the domestic legislation neither the struggle against this phenomenon nor the phenomenon itself is mentioned. The Ukrainian government is not willing to eliminate gaps in the legislation and the fight against corruption is not effective enough and all these factors are excellent conditions for raid but not populism or the fact that owners of companies and top management disregard business security of their enterprises.

Small business entrepreneurs rarely borrow an initial capital from banks as interest rates are too high. Bankers, in turn, find it difficult to assess the customers’ solvency, especially when they provide loans to start-ups. Banks demand sustainable solvency, good sales and high profitability from business owners, and on top of that they need a competent business plan and records of all current accounts. Hryvnia loans are often not profitable, and currency loans are prohibited.

Summing up we can say that all of these facts are not new to our country. Ukraine is the lowest in the ratings of business development in the world. The main problem is the Ukrainian government, the legislation, the taxation system. Thus, the development of both small and large businesses is slowed down by a high level of corruption.

The list of references:

1. Web resource. – Access mode: http://podrobnosti.ua/analytics/2012/04/09/ 830659.html

2. Web resource. – Access mode: http://www.expert.ua/articles/7/0/9195