National Bank of Ukraine, Finance Ministry opposed to 50% profit tax for banks

MOSCOW. Aug 28 (Interfax) - The National Bank of Ukraine (NBU) and the Finance Ministry have spoken against the idea to increase profit tax for banks to 50% from 25% in 2024, as per an updated government bill on increasing taxes, Ukrainian media quoted Yaroslav Zheleznyak, deputy head of the Verkhovna Rada's Financial, Tax, and Customs Policy Committee, as saying on his social account.

"The Finance Ministry is opposed to increasing the tax on banks to 50%. Firstly, the IMF [International Monetary Fund] is against this. Secondly, they said this would pose the risk of [failing to achieve the planned level of] domestic borrowing," Zheleznyak said.

"The National Bank has also spoken against this. They say this poses the risk of additionally increasing the capitalization of state-owned banks," he said.

Zheleznyak agreed with the NBU's and Finance Ministry's objections and said this provision was deleted from the bill.

As reported, the parliamentarian on Monday published an updated government bill, which stipulated increasing profit tax for banks to 50% from 25% and that for financial companies to 25% from 18%. The bill also required that personal income tax reports be submitted on a monthly basis.

The document retained the provisions on increasing the military levy to 5% from 1.5%, setting it at the level of 10% of the minimum wage for individual entrepreneurs of the first and second groups, and setting it at the level of 1% as part of a unified tax for the third group.

The government dropped the idea of introducing 1% turnover tax for businesses in the updated bill, without proposing that the value-added tax (VAT) be increased as an alternative.