The Rada wants to impose higher taxes on banks: The National Bank warns of the risks
22 May 13:37
A bill has been introduced in the Verkhovna Rada proposing amendments to the Tax Code of Ukraine regarding the specifics of corporate income tax for banks. The initiative calls for extending the higher tax rate for banks through 2027—at a rate of 50%.
This was announced by Danylo Getmantsev, chairman of the parliamentary committee on finance, tax, and customs policy, according to "Komersant Ukrainian"
The bill proposes extending the application of the increased corporate income tax rate of 50% for banks through 2027 and limiting the ability to reduce financial results by offsetting them against losses from previous periods.
Why are they proposing higher taxation for banks?
The bill’s sponsors explain the need for these changes by noting that the banking sector is generating high profits during the war. Among the reasons cited are, in particular, income from transactions involving government securities.
By the end of 2025, the revenues of 60 banks reached 579.3 billion UAH. This is 14.2% more than in 2024 and nearly 30% more than in 2023.
“In the context of the war, funding the security and defense sector is our unconditional top priority. During 2023–2024 and 2026, additional taxation of banks has already proven its effectiveness. Therefore, we are acting proactively: to ensure the predictability of tax policy, we are securing financial resources for the future right now,” he explained.
What tax rate is being proposed
The proposal is for a 50% tax rate on bank profits.
This rate has been applied to banks before.
According to the NBU, banks have already paid the increased 50% tax rate twice: in 2023, they paid UAH 77 billion, and in 2024, UAH 96 billion.
The regulator noted that the banking sector effectively accounted for a significant share of the state’s tax revenues.
What the bill’s authors say
Supporters of the initiative believe that, in the context of the war, the banking sector should make a greater contribution to financing the budget.
The logic behind the bill is as follows: if banks generate high profits, particularly through government debt instruments, a portion of those profits should be directed toward the state’s needs.
The explanatory note to the initiative emphasizes that additional taxation of banks was already applied in 2023–2024 and in 2026 and generated additional budget revenues.
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Why the NBU Opposes It
The National Bank of Ukraine has criticized the idea of extending the increased tax on bank profits. The NBU believes that a 50% rate under current conditions could pose a threat to further lending to the economy and the ability of banks to support businesses and the population during the war and reconstruction.
The regulator warns that the increased taxation could negatively impact the sector’s liquidity, as banks would have to allocate a significant amount of funds to pay the tax.
Separately, the NBU highlights the risks for certain state-owned banks. The regulator believes that due to the 50% income tax rate, some state-owned banks may require additional capitalization.
The NBU also warns that the increased tax could prevent banks from implementing capitalization programs based on the results of the 2025 stress test and regulatory requirements related to EU integration.
“This decision could indeed have a negative impact on the sector’s liquidity due to the need to divert a significant amount of funds to pay the tax. There is also a risk that a number of banks, including state-owned ones, will fail to implement capitalization programs based on the results of the 2025 stress test and regulatory requirements within the framework of EU integration, which could lead to the need for recapitalization of certain state institutions at the expense of taxpayers,” the regulator believes.
At the same time, National Bank Governor Andriy Pyshnyy emphasized that this decision will have a short-term fiscal effect but will deprive the economy of the opportunity to grow.
“We cannot equate the situation in 2023 with today’s reality. Back then, the banking sector accepted the tax increase to 50% with understanding as a one-time, necessary measure, since the profits were largely of a non-market nature. Today, the reality is different,” he stated.
Pyshnyy emphasized that banks’ profits are generated primarily through lending to the economy and investments in government bonds, that is, through support for the state and business amid the war.
He noted that banks do not simply accumulate capital; they transform it into loans for businesses, support for the energy sector, the defense sector, and the country’s reconstruction.
“At the same time, banks’ return on equity is already declining: 59% in 2023, 52% in 2024, and about 50% in 2025. This is a natural process of returning to a more market-oriented model of the sector’s operations,” the NBU head noted.
The head of the National Bank emphasized that the burden on the banking sector is disproportionate. He stressed that banks accounted for 11% of all state budget revenues, including dividends from state-owned banks, while their share of GDP is only 2.9%.
“And there is another fundamental point here. State-owned banks generate half of the sector’s profits. In other words, with this tax, the state is effectively extracting additional resources from its own banks, which finance critical sectors of the economy and are the largest investors in government bonds,” Pyshnyy explained.
According to the head of the NBU, the most significant problem with the initiative is that the extra tax limits the economy’s future credit resources. He noted that while the expected revenue from extending the increased tax is approximately 20 billion hryvnia, the state risks losing 200–300 billion hryvnia in potential resources for lending to the economy in the future.
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