Ukraine discussing with IMF prospects of replacing profit tax with exit capital tax – Poroshenko

Ukrainian President Petro Poroshenko says Ukraine is discussing with the International Monetary Fund (IMF) the prospects of replacing the corporate profit tax with exit capital tax, which will increase the country's investment attractiveness.

"On my instructions, we are discussing with the International Monetary Fund the introduction of an exit capital tax," the president said in Vinnytsia at a meeting on decentralization.

According to Poroshenko, the Ukrainian side is discussing with the Fund compensators for losses to the state budget as a result of tax changes.

Read alsoUkraine's presidential administration: Introduction of exit capital tax may cost US$1.1 blnAs 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 In his words, the replacement of the corporate profit tax with the tax on withdrawn assets will help the country to eliminate corruption schemes in the administration of taxes.

The Cabinet of Ministers in October 2017 backed the bill on imposing the tax on withdrawn assets and forwarded it to the National Reforms Council.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