Ukraine's Verkhovna Rada has revoked 2% pension tax imposed on cash currency purchase transactions.

The requirement is outlined in bill No. 5132 amending the Tax Code to provide for the balance of budget revenue in 2017. The bill on the national budget for 2017 was adopted by 235 lawmakers in early hours of Wednesday, December 21.

The amendments were made to the law on the obligatory state pension insurance tax.

As reported, on November 1, 2016, bill No. 4741 on amendments to the Budget Code on ways to pull forex operations out of the shadows passed its first reading due to the support of 247 MPs.

Tax on forex operations for the first time was introduced in 1998 as a temporary anti-crisis measure. Its rate was 1.5% before 2006. It was then lowered to 1.3% and was cut to 1% in 2007, 0.5% in 2008 and further to 0.2% in 2009.

In January 2011, the Rada cancelled pension tax on forex transactions, but in 2014 it set the rate at 0.5% again.

From 2015, it was increased from 0.5% to 2%, but it is applied to purchases of foreign currency in cash with legal entities being exempt from this tax.

The initiators of the bill said that Ukraine's shadow market exceeded 50%, which creates the additional pressure on the hryvnia and hampers the operations of the forex market in the country. The National Bank of Ukraine (NBU) and international financial institutions (IFIs) backed the idea.