REUTERS
The National Council of Reforms recommended that the Government and the Parliament accelerate the tax reform implementation and adopt the necessary package of documents to change tax rates effective from January 1, 2016, the presidential press service reported based on results of the National Council meeting.
In particular, it is noted that the corporate income tax and personal income tax will not be raised despite previous intentions.
"The key position is that we will not raise tax pressure either on citizens or business," the press service reported citing the President.
"If we set 18% for corporate income tax and personal income tax in 2016, in 2017, this rate must be reduced by 1% and in 2018, we should set a landmark by which we achieve maximum 20% of payroll tax pressure - approximately 10% for personal income tax and 10% for single social security tax," the President said.
According to the head of state, it is difficult to find a country, which lowers taxes in war conditions.
Read alsoPresident says 2016 budget will be based on new Tax Code"We are defining our strategy. We should do this anyway. It is a revolutionary step, but we have to adopt a strategy of gradual yet prompt and radical reduction of single social security tax," Petro Poroshenko said.
The President admitted that tax and budget issues are not the direct domain of the President's responsibility, but in view of the pressure and challenges to the national security, he [President] was ready to moderate the debates developed between the government and the parliament that have different views as for the tax reform.
The President emphasized that it goes about not only the necessity of adoption of the state budget, because it is necessary to fund expenditures, inter alia on defensive sector.
"It goes about the fact that the adoption of the budget and amendments to the tax legislation are the main conditions for receiving the IMF funding. For today, the IMF funding is crucial for ensuring financial stability of the country," the Head of State noted, urging to seek a compromise draft bill.
According to the President, tax amendments should meet three demands.
"They should stimulate economic development. Tax rates, administration and transparency should influence the investment climate," Poroshenko said.
Read also"Overhaul": tax reform may beat corruption, Jaresko saysAs UNIAN reported earlier, the Ukrainian Finance Ministry published the draft state budget for 2016 and the draft tax reform. The budget deficit is projected at 3.7% of GDP, an increase in social standards by 12%, or in line with the annual inflation, the hryvnia exchange rate of 24 UAH to the dollar. The budget envisages that funding on the defense sector will be increased UAH 100 billion. The proposed tax reform provides the introduction of a flat rate for key taxes – value added tax, personal income tax, corporate income tax, single social security tax – at the level of 20% each, with the moratorium to be introduced regarding any further changes to the Tax Code. The tax reform draft also proposes the elimination of a simplified taxation system for legal entities and reduction in the number of groups of single tax payers.
Read alsoJaresko: Reform retreat top economic risk for UkraineAnother draft tax reform was developed and presented by a Parliamentary Committee on Taxation and Customs Policy. The parliament’s tax reform is more liberal, but seems to be less acceptable for the IMF.
The International Monetary Fund, Ukraine's key creditor, has not yet scheduled a meeting on Ukraine, signaling that it is waiting for the adoption of a budget for 2016 and amendments to tax legislation in Ukraine, IMF Resident Representative in Ukraine Jerome Vacher told earlier.
Read alsoReuters: IMF rule change keeps Ukraine support; Russia complainsThe parliament voting on tax changes and the 2016 draft budget is scheduled for December 10.