Post-War Update on Tax Reform in Ukraine

by Meifan Honcharuk
Tuesday, June 6, 2023
Post-War Update on Tax Reform in Ukraine

10% flat income tax rate, 10% personal income and 10% VAT and the complete abolition of all benefits

In April 2023, a new tax reform was introduced that will adapt the Ukrainian economy to new realities, improve citizens' quality of life by reducing mandatory deductions, and make Ukraine more attractive for foreign investment. What does the new tax reform imply: income tax — 10%, corporate income tax — 10%, VAT — 10%. At the same time, benefits and pension fees are being abolished, responsibility for tax violations, and state participation in the banking sector is increasing. However, implementing this scheme will start only after the war since now all business income and taxes of individuals go to the defence of Ukraine, and the rest of the budget funds are IMF tranches.

Volodymyr Zelenskyy confirmed the information that the reform of the tax system will definitely take place, and the country's recovery will take place in the conditions of a renewed, pro-European economy.

"We are a subsidized economy. We do not set the rules now when it is not our economy that generates money, but they give it to us. Because we pay pensions at the expense of other states. Therefore, we must reckon with the IMF," Volodymyr Zelenskyy.

The reform already has its opponents, who say that 10-10-10 will only benefit businesses, not individuals. However, you cannot build a new economy on the old tax system, and after the war, Ukrainians need to prepare for positive changes.

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