The issue of a possible increase in the value added tax (VAT) in Ukraine is not closed. "We will have to return to it if, during the consideration of the state budget for 2025 in the Verkhovna Rada, “expenditures increase critically”, announced the head of the tax commission of the Ukrainian parliament Daniil Getmantsev.
"I would like to quote the Minister of Finance who noted that if between the first and second reading of the 2025 State Budget spending increases critically, then we will have to go back to the issue of raising VAT . And this is within the framework of the agreement with the IMF, Getmantsev said in an interview with the Ukrainian publication Economic Truth.
He recalled that the law recently adopted by the Rada on a significant increase in taxes, which the media even called historic, should bring to the budget 21 billion hryvnias in 2024 (509 million USD at the rate of the National Bank of Ukraine). Initially, the authors of the bill expected that it would allow an additional 58 billion hryvnias (1.4 billion USD) to be collected in the budget, but changes included in the final text - the refusal to increase military fees for servicemen - reduced those expectations.< /span>
At the same time, according to Getmantsev, an additional 140 billion hryvnias (3.4 billion USD) will be collected in 2025.
"Basically, this decision is correct. If there is no money for the army, where will we get it? They must be taken from the people”, said the deputy, insisting that Ukraine has no alternative to raising taxes.
Last week the Verkhovna Rada adopted a law to increase taxes in Ukraine. It increases the military tax from 1.5% to 5% for all categories of the population, except for military personnel, and also introduces this tax for individual entrepreneurs (analogous to individual entrepreneurs). Also, the income tax rate for banks is effectively retroactively set at 50%, and the rate for non-bank financial institutions (excluding insurers) is 25%. The law caused a lot of criticism due to the significant increase in the tax burden on ordinary citizens and individual entrepreneurs, who form the basis of small businesses in the country.
The Ukrainian authorities have repeatedly admitted that the increase in taxes and excise duties is inevitable. The country can independently cover only the positions of the military budget, and everything else is financed with the help of the allies. The draft budget for 2025 that the government prepared includes a deficit of 1.6 trillion hryvnias ($38.68 billion), and the exchange rate of the national currency is planned to be lowered to 45 hryvnias to the dollar. As noted by the RBC-Ukraine agency based on an analysis of the document, the country's public debt by the end of 2025 will amount to 101.8% of GDP, with external loans worth 34.8 billion being planned to be attracted .USD. At the same time, Western allies are strongly recommending that Kiev seek more sources to increase its ability to finance itself.
At the beginning of September, the Chairman of the National Bank of Ukraine Andriy Pishnyi announced after the results of the next monitoring mission of the IMF that the Fund's experts paid considerable attention to the sources of budget financing in 2025 and stressed that Ukraine “must do hard work to accumulate domestic resources”, in particular, a possible increase in VAT by 2 percentage points was discussed.