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capitulation,” he said.
At the Minsk talks on October 1, an agreement was also reached on the withdrawal of military forces from the frontline towns of Zolote and Petrivske in the Luhansk region, Zelensky said. Meanwhile, a pedestrian bridge should be completed by the end of November in the frontline town of Stanytsia Luhanska, where the first successful mutual withdrawal of forces occurred, as boasted by Zelensky. The last obstacles to the next Normandy Format talks were removed on October 1, Zelensky added, also promising a date soon.
The approval of the Steinmeier formula was a precondition set by the Russian government for holding the Normandy Format talks, said on October 2 People’s Servant MP Bohdan Yaremenko, the head of the parliamentary foreign affairs committee, as reported by the pravda.com.ua news site. The full text of the agreed upon Steinmeier formula – consisting of two paragraphs – was published on the kommersant.ru news site on October 2. It was signed by former President Leonid Kuchma, Ukraine’s representative to the Trilateral Contact Group; Russia’s representative Boris Gryzlov; two representatives of the occupied territories; and OSCE special representative Martin Sajdik. The same day, the Steinmeier agreement was lauded by German Foreign Minister Heiko Maas, while French President Macron called for its implementation.
2.2 Half of Ukraine’s economy is in the shadows
Ukraine’s shadow economy has grown to 47.2% of its gross domestic product in 2018, an increase from 46.8% in 2017, according to research by the Kyiv International Institute of Sociology.
This is considerably higher than previous findings by the Ministry of Economic Development and Trade, which estimated the shadow economy in 2018 at just under a third of GDP in July. The size of the shadow economy represents a major fiscal problem and an obstacle to further economic growth.
The proportion of the economy in the shadow crept up by a few percentage points across almost all regions of Ukraine, except the north and centre, which saw a 4% decline from 2017.
Retail and construction are deepest in the shadows, with more than half of all economic activity in those sectors being undeclared. However, the proportion of shadow activity in retail and construction declined since 2017.
The institute found three predominant forms of tax avoidance, chief among, which was revenue concealment. About 56.7% of enterprises that participated in the shadow economy hid their revenue in 2018, compared to 60.2% in 2017.
Other methods include concealing the total number of employees and the total salaries paid to employees — just over 21% of enterprises engaged in either of these practices. Salary concealment was the fastest-growing method, with 21.3% of enterprises employing it in 2018 compared to 18.3% in 2017.
According to the survey, enterprises hid 40% of their revenue last year, while
8 UKRAINE Country Report November 2019 www.intellinews.com