18:32 25.10.2018

CORRECTED: Economy ministry estimates possible reduction in budget revenues from introduction of exit capital tax at 1.2-1.3% of GDP

2 min read

(The title has been changed, paragraphs 4-5 have been added in the news item issued on October 24)

 The introduction of exit capital tax in Ukraine could affect revenue of the national budget, and the ability of the country to service external liabilities.

The Finance Ministry pointed out the respective risk in the preliminary offering memorandum for eurobonds, a copy of which has been sent to Interfax-Ukraine.

"According to the assessments of the Economic Development and Trade Ministry, the introduction of the tax could result in a loss of around 1.2-1.3% of GDP, which would entail the large expansion of the deficit of the national budget and total reduction of expenses," the ministry said.

The Ministry of Economic Development and Trade in the calculations provided to the Ministry of Finance specifies that the matter concerns total budget losses calculated as a percentage of the forecasted GDP, which are possible in the first year of the tax initiative.

"Considering the fact that the deadline for paying profit tax for the fourth quarter of 2018 to the general fund of the consolidated budget is in the first quarter of 2019, part of the budget losses will be compensated for by income tax revenue [the Finance Ministry estimated the figure at UAH 25.8 billion]," the Economy Ministry said.

The ministry also said that the introduction of this tax could not meet the cooperation program with the International Monetary Fund (IMF).

As reported, Ukrainian President Petro Poroshenko on July 5, 2018 submitted a bill on exit capital tax to the Verkhovna Rada (No. 8557). The bill contains a requirement to determine compensators for revenue of the national budget.

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