The Cabinet of Ministers plans to increase VAT and introduce a military tax for individual entrepreneurs
23 May 2024 11:42
The Ministry of Finance is working on a draft law to increase taxes. The changes concern VAT and military duty. Four MPs and a government official told Forbes about this, "Komersant Ukrainian" reports
The military tax may be increased from 1.5% to 5%, and the same rate may be applied to individual entrepreneurs.
The VAT increase is being considered at 2-3%.
The main reason for the possible tax increase is the growth of the country’s military needs. According to a source from the Finance Committee of the Verkhovna Rada, the additional budget needs are estimated at UAH 400-500 billion.
According to Forbes, an increase in the military tax rate from 1.5% to 5% for employees (excluding the introduction of this tax for individual entrepreneurs) could bring in an additional UAH 90-100 billion a year to the budget.
A 1% increase in the VAT rate would generate about UAH 40 billion in additional annual budget revenues. A 2-3% increase in the VAT rate could increase budget revenues by UAH 70-80 billion and UAH 100-120 billion, respectively.
The total amount of additional revenues could reach UAH 200 billion, or 2.5-2.7% of GDP, excluding the possible introduction of a military tax for private entrepreneurs. The problem is that if a 5% military tax is introduced on the income of third-group individual entrepreneurs, their tax burden will double.
MPs say that tax increases are inevitable.
The relevant draft law may be submitted to the Rada in late June or early July. The new tax rates may come into effect in September.
