Discussion about exit capital tax with IMF without looking for compensators is senseless
Ukrainian Finance Minister Oleksandr Danyliuk believes that the discussion with the International Monetary Fund (IMF) on the replacement of profit tax by exit capita tax without looking for compensators is senseless, he said in an interview with Interfax-Ukraine.
"The IMF knows that only the Ministry of Finance is responsible for the tax policy and budget. We discussed the model with them in the spring of 2017 and they analyzed it when we drafted the bill for submission to the Cabinet of Ministers. Then we came to a conclusion together with the Fund that it is necessary to find compensators for submitting [the bill] to the Verkhovna Rada. Now I do not even discuss this issue with the Fund until the compensators are defined," he said.
At the same time, he said that the Ministry of Finance is considering the reduction of the financing of law enforcement agencies as the main source for covering budget risks when introducing the exit capital tax.
"As for possible compensators [of the introduction of tax on the withdrawn capital], we have some expenses, especially on law enforcement agencies, that are inadequately set too high for our country. This role of law enforcement agencies is not adequate for a democratic country. Their numbers and funding should be reduced. This is one of the sources to cover the projected budget risks," Danyliuk said.
According to him, the Ministry of Finance estimates the budget losses in the first year of the tax replacement at UAH 25.9 billion, in the second – at UAH 31 billion.