Member of Parliament (MP) from the Party of Regions Yevhen Sihal has proposed a 25% tax on individuals' income paid as interest on bank deposits.

He tabled a respective bill in parliament on February 26, 2013.

Under the bill, the tax base of incomes in the form of interest on a current or deposit bank account, on deposits at non-bank financial institutions or on a deposit certificate is defined as the excess of interest accrued in accordance with the terms of a contract over the amount of the interest rate of the National Bank of Ukraine increased by five percent.

The author of the bill claims that the introduction of a 25% deposit income tax will allow banks to obtain low-cost loan resources. What is more, it is supposed to encourage individuals to spend incomes on buying commodities and services. He suggests that funds to be raised as tax on income from individuals' bank deposits be transferred to the Pension Fund.

Under the bill, it should become effective as of January 1, 2014.

The Tax Code presently provides a 5% tax on income received by individuals from the placement of bank deposits, which is to become effective from January 1, 2015.