Mobile communications may rise in price by 20-30% due to tax hikes
25 July 2024 15:34
The Ukrainian government proposes to increase the income tax on mobile operators Kyivstar, Vodafone and lifecell to 5%. This may lead to an increase in tariffs for communication services, "Komersant Ukrainian" reports citing Forbes.
The package of legislative changes to increase military tax rates for individual entrepreneurs and other business representatives, which the government has submitted to the parliament, includes a 5% tax increase for mobile operators.
According to Forbes, the introduction of such a tax could bring an additional UAH 3.3 billion to the state budget. In 2023, Kyivstar, the largest mobile operator, generated UAH 33.5 billion in revenue, while Vodafone generated UAH 21.6 billion. Lifecell, the third largest, does not disclose this figure. According to Forbes, it could be as high as UAH 10 billion.
“On the one hand, the state declares the criticality of communication for citizens as a vital necessity, and on the other hand, it equates it with luxury goods such as new cars, jewellery, precious metals, etc. We consider the introduction of such a tax to be unfair, given that we already pay the military tax like all other businesses. In fact, we are talking about double taxation of mobile operator services,” Kyivstar’s press service said in a response to a Forbes inquiry.
According to Oleksandr Glushchenko, a former board member of the Internet Association of Ukraine (IAU), this tax will affect all citizens, as even young children use mobile communications. The tax will result in a 20-30% increase in subscription fees by the end of the year.
Kyivstar’s press office confirmed that the tax increase could affect the cost of tariffs, but did not specify how much.
Vodafone said it considered the increase unfair.
“In fact, we are talking about double taxation of mobile operator services,”
– the operator’s press service stressed.
Kommersant Ukrayinsky 
reported that the government also proposes to impose a military tax on some transactions:
- 5% of the value of precious metals;
- 30% of the cost of jewellery;
- 15% of the value of cars purchased by legal entities and individuals (except in cases of providing such cars to persons with disabilities);
- 5% of income from the sale of real estate by individuals who sold one property during the year;
- 5% of the tariff for the use of mobile communications.
When taxes will increase
These rules have not yet been adopted.
The government is expected to review and approve the draft law in the near future.
After that, it will be considered by the Verkhovna Rada and, most likely, adopted. According to Danylo Hetmantsev, Chairman of the Verkhovna Rada’s Tax Committee, there is no alternative to raising taxes.
As a reminder, the Cabinet of Ministers of Ukraine is planning tax changes. According to a published document, the government plans to raise the military tax, which currently stands at 1.5%, to 5%.
In a commentary to Kommersant Ukrainian 
, investment banker Sergey Fursa said that such a step was forced, as military operations continue in the country. In his opinion, a better solution would probably be to raise VAT or excise taxes, but the most important thing is to fill the budget.
