Ukraine's presidential administration: Introduction of exit capital tax may cost US$1.1 bln

Deputy Head of the Presidential Administration of Ukraine Dmytro Shymkiv says the replacement of corporate profit tax with exit capital tax may result in a loss of about UAH 30 billion (US$1.1 billion).

"We are making additional calculations to submit the bill to the parliament... According to current estimates, budget losses [from the introduction of the exit capital tax] will amount to about UAH 30 billion. But this is a low-case scenario. I think the figure can be reduced," he said at a meeting with representatives of the European Business Association on March 27.

Read alsoIMF doesn't support replacement of corporate profit tax with exit capital taxShymkiv noted that de jure unprofitable companies legally withdraw UAH 60 billion ($2.3 billion) from Ukraine annually. However, the adoption of the bill will prevent such schemes.

In addition, the introduction of the exit capital tax will allow the taxation of entities that previously did not pay taxes.

"Ukrainian businesses will receive about UAH 150 billion [$5.7 billion] for investment in the first year. I think this is a good option," he added.

As UNIAN reported earlier, Ukrainian President Petro Poroshenko proposed compromises to businesses on the introduction of the exit capital tax and announced his plans to resubmit the bill to the National Reforms Council. In his words, the replacement of the corporate profit tax with the tax on withdrawn assets will help the country to eliminate corruption schemes in the administration of taxes.

The Cabinet of Ministers in October 2017 backed the bill on imposing the tax on withdrawn assets and forwarded it to the National Reforms Council.

Ukraine's Minister of Finance Oleksandr Danyliuk says the bill stipulates that the tax base for enterprises will be dividends and incomes equal to dividends, such as royalties and interest. Dividends are proposed to be taxed at a rate of 15%, while payments equal to dividends at 20% per annum.

Most Ukrainian business associations supported the bill.

The International Monetary Fund opposes the bill in the event of its adoption without compensation for budget losses.

The Ukrainian Finance Ministry has been supporting the introduction of the new tax from 2019 as a substitute for the corporate profit tax, subject to the adoption of a three-year budget resolution that will compensate for UAH 25 billion ($946.6 million) in budget losses.