Cabinet puts delay in cut of profit tax and VAT into final clauses of draft budget for 2014

The Cabinet of Ministers of Ukraine is including a postponement of the reduction in profit tax and value added tax (VAT), in line with the requirements of the Tax Code of Ukraine, in the final clauses of the draft law on the national budget for 2014.

First Deputy Head of the parliamentary committee for budget issues, MP Oksana Kaletnyk (the Communist faction), said that business was expecting a reduction of the tax rates.

"The Tax Code really does foresee a reduction of profit tax and VAT, and business is waiting for the requirements stipulated in the code to take effect. The government plans to manage the process manually, but this is illegal. The final clauses of the draft law on the national budget include a clause on the suspension of the requirements," she said.

The lawmaker said that there is no sense in dividing the notions of the postponement of the reduction of tax rate and its suspension.

"Suspending and postponing are the same. One can postpone for an indefinite period of time," she said.

Kaletnyk said that the projected indicator for the collection of profit tax in the draft national budget for 2014 is UAH 7.3 billion lower compared with the indicator for 2013, while VAT for Ukrainian-made products is UAH 3.2 billion lower. It is planned to increase budget VAT refunding by UAH 15.4 billion compared to 2013, she added.

According to the Tax Code of Ukraine, from January 1, 2014, VAT was to be reduced from 20% to 17% and profit tax from 19% to 16%.