Lobbyists are being offered the status of independent professional practice

Individuals engaged in lobbying are being offered the status of independent professionals. To achieve this, it is necessary to amend the Tax Code and the relevant law, as well as to define the specifics of taxing lobbyists’ professional income and expenses.

These proposals were discussed at a meeting of the UNBA Committee on lobbying, attended by representatives of the State Tax Service and the State Regulatory Service.

Committee chairman Oleksiy Shevchuk explained that although lobbying activities are conducted officially and are commercial in nature, there is no special professional or tax status provided for individuals engaged in such activities. In his view, one possible model is for such activities to be carried out by a self-employed individual, similar to the practice of law.

Elaborating on this position, advocate Yevhen Stryzhak noted that lobbying activities involve professional expenses, so taxing net income would better reflect the actual economic outcome than taxing gross income, particularly under the third-group model of the simplified tax system. According to him, an individual lobbyist provides intellectual, consulting, and advocacy services, working independently and at their own risk. This provides grounds for considering lobbying as an independent professional activity alongside other types of professional practice provided for by tax legislation.

To implement this approach, it was proposed to amend the definition of independent professional activity in Article 14 of the Tax Code to include individuals engaged in lobbying. At the same time, the Law «On lobbying» will need to be amended to include a provision stating that an individual lobbyist is a subject of independent professional activity.

A representative of the State Tax Service – director of the Department of Individual Taxation – Volodymyr Kyzyma clarified that under current legislation, a lobbyist may register as a sole proprietor by choosing either the general taxation system or the third group of the simplified taxation system. There are currently no restrictions on using KVED code 70.21 «Public Relations Activities» under the third group. At the same time, amendments to the Tax Code are indeed necessary to recognize lobbyists as entities engaged in independent professional activities. The relevant proposals must be submitted through the Ministry of Finance, which formulates state tax policy; thereafter, the State Tax Service will be able to participate in their review.

«Today, it is extremely important to develop a balanced, transparent, and understandable taxation model that will account for the specific nature of lobbying professionals’ activities and promote the development of a civilized lobbying market in Ukraine. In this regard, we urge all colleagues-advocates who engage in or plan to engage in lobbying activities to submit their proposals regarding the desired taxation system», - O. Shevchuk commented on the results of the meeting.

Proposals should be submitted by August 1. The Committee plans to compile them and take them into account when preparing a separate draft of amendments to the Tax Code, which will be sent to the Ministry of Finance, the State Tax Service, the State Regulatory Service, and the relevant parliamentary committee. Meeting participants also noted that amendments to the Tax Code must be enacted as a separate law and cannot be combined with provisions regarding the professional status and guarantees of lobbyists.