Ukraine raises tax on bank profits

MOSCOW. Nov 22 (Interfax) - Ukraine's Verkhovna Rada on Tuesday passed a law in the final reading to raise the tax on bank profits, Ukrainian media reported, citing Yaroslav Zheleznyak, the first deputy chairman of the parliamentary committee for finance and tax and customs policy, as posted on Telegram.

The profit tax rate will be hiked to 50% from the current 18% for 2023 and will be 25% in subsequent years.

"The text was changed on the insistence of the IMF, the Finance Ministry and the NBU [National Bank of Ukraine]. This norm will be in the updated memorandum (expected in the middle of December)," Zheleznyak said.

The initial bill passed in the first reading on October 19 called for temporarily raising the profit tax to 36% in 2024 and 2025.

The passed law bars banks from applying past losses to profit in 2023, but this will again be possible starting in 2024.

"The Finance Ministry estimates this will bring in UAH24 billion-25 billion for 2023 alone. Subsequently it will be UAH6 billion-7 billion," Zheleznyak said.

Ukraine's solvent banks saw their net profit surge to a record UAH109.9 billion in the first nine months of 2023 from UAH7.4 billion in the same period last year. The profit tax for the period grew to UAH19 billion from UAH4.3 billion a year earlier.

The most profitable bank by far was state lender Privatbank, with UAH43.37 billion, or 39.5% of the whole banking sector's net profit for the period.

Profits totaled UAH14.18 billion at Oschadbank, UAH6.14 billion at Raiffeisen Bank, UAH5.68 billion at First Ukrainian International Bank, UAH5.66 billion at Ukrsibbank, UAH5.58 billion at Sense Bank, UAH4.75 billion at OTP Bank, UAH4.23 billion at Citi and UAH3.6 billion at Ukreximbank.

The 12 banks whose net profit for the first nine months of 2023 exceeded UAH2 billion also included Ukrgazbank with UAH2.92 billion, Universal Bank with UAH2.86 billion and Credit Agricole with UAH2.29 billion.

The official exchange rate was UAH36.05/$1 on November 21.