More taxes, less transfers. Economic reforms

The Cabinet of Ministers is working on a bill to increase taxes;

In Ukraine they want to increase taxes and limit the transfer of funds from card to card. The tax increase is disputed by the lack of funds in the state budget for the purchase of weapons, and the restrictions on migration are disputed by the fight against fraud.

New tax

According to Forbes, the Ministry of Finance is working on a bill to increase military duty and value added tax (VAT).

The government plans to increase the military tax from 1.5% to 5%, said three Rada deputies. A similar tax rate of 5% could be introduced for private entrepreneurs, according to two deputies from the financial and economic bloc.

There are still discussions about the rate of VAT growth. The likely increase is 2-3%, added one of the interlocutors of the publication.

The changes are not final, the discussion on them is still ongoing, said four Forbes interlocutors in the Rada and the Cabinet of Ministers.

The main reason is the increase in military demand. About UAH 300 billion is required for further mobilization, head of the budget committee Roksolana Podlasa predicted at the end of January. And even without taking into account the mobilization, 400 billion UAH are needed for the purchase and repair of military equipment, he said.

Finance Minister Sergei Marchenko estimated that the budget gap due to military spending is somewhat smaller – at $5 billion, which at the current exchange rate is about 200 billion UAH.

When asked about a possible increase in taxes, Marchenko did not give a definite answer, noting that this issue will be resolved in the near future. “First we need to calculate correctly,” said the head of the Ministry of Finance. “There is no magic solution, like raising the military levy.”

According to Forbes calculations, an increase in the military levy rate from 1.5 to 5% for hired workers (without taking into account the possible introduction of a military levy for private entrepreneurs) could bring the budget an additional 90- 100 billion UAH per year.

The preparation of such a document was confirmed by the Deputy Chairman of the Finance Committee, Yaroslav Zheleznyak, emphasizing at the same time that he was not familiar with the details of the project.

Card transactions

The National Bank of Ukraine is preparing to limit card transfers and introduce maximum limits for card-to-card money transfers between individuals

It is expected that the limits on outgoing P2P transfers may be 100 thousand UAH and 30 transactions per month for one account. Restrictions only apply to P2P (person-to-person) card-to-card transfers. At the same time, the changes will not affect payments and other transactions. Also, incoming transfers remain unrestricted.

The NBU initiative is related to the spread of shadow financial transactions known as “drops” or “money mules”. In particular, attackers buy personal data from ordinary citizens – from pensioners to students – and open bank cards. Hundreds and thousands of transactions go through these cards, mostly for amounts below UAH 400,000, because up to this threshold transactions are not subject to financial monitoring. According to the National Bank, the volume of such shadow transfers can reach billions of Hryvnia.

“According to our calculations, 95% of bank clients will not notice these restrictions. But shadow payments to criminals who use individuals’ cards for, for example, tax evasion and criminal activities, will be more difficult and more expensive, “said the Deputy Head of the NBU Dmitry Oleynik at a media meeting.

They are also used in some industries for “envelope” salaries, withdrawal of funds abroad, for drug trafficking operations, and so on.

Restricting transfers will not completely destroy these schemes, but should complicate the work of fraudsters, notes the National Bank.