There is no final decision on the tax increase yet, but the draft law on the increase is already in the Verkhovna Rada. Politically, this decision to increase taxes is likely to be adopted, as the Cabinet of Ministers sees no other way to close the UAH 500 billion budget deficit, says Oleksandr Bondarenko, managing partner of the Bureau of Investment Programs. He adds that they are currently discussing on the sidelines whether to increase taxes for businesses and individuals on 1 September or 1 October.
"It is not economically beneficial for the country. After all, if taxes are raised, the shadow economy will increase; some businesses will become unprofitable, and some businesses will move to EU countries, where there are currently more favorable conditions for electricity tariffs and grant opportunities for businesses. Plus, there is security," explains Bondarenko. - "If we talk about raising the VAT rate, it will not help close the state budget deficit of UAH 500 billion. The maximum that an increase in the VAT rate will bring is UAH 50-60 billion. In other words, the main problem will not be solved. However, it will create a lot of noise and opportunities for corruption schemes. Ukraine should have abandoned VAT long ago and introduced a sales tax."
As a reminder, the Verkhovna Rada is already considering the draft law on tax increases.
The main changes in taxation are as follows:
Increase the military tax from 1.5% to 5% for individuals, including sole proprietors. For two months, the rate will be 5% for individual entrepreneurs of groups 1, 2, and 4.