IMF: Ukraine’s Tax Policy to be Double-Dealing

The International Monetary Fund is sure that Ukraine’s tax policy is double-dealing. On the one hand, in recent years, the state has carried out significant work on improving and updating the tax system. On the other hand, it plans now to make fundamental changes that throw into question the main provisions of the current system. The IMF reports, published on 23 November 23, state this.

“The serious efforts have been made, e.g., to modernise the profit tax’s international aspects, to bring the regime in compliance with the Organisation’s for Economic Co-operation and Development standards. But some political debates try to abolish the corporate profit tax persistently,” the document said.

The IMF clarified that the core idea of this proposal is to replace the tax with a tax on distributed income (or on withdrawn capital) because of some individuals’ desire.

“This system will not tax profits when it accumulates in the corporation, postponing the payment of tax until the corporation distributes dividends to shareholders,” the Fund said. They also stressed that they can’t find the middle ground now. Therefore, IMF experts believe that the introduction of a tax on withdrawn capital will lead to a significant loss of budget revenues, which is a regressive process.

To recall, the day before, Tymofiy Milovanov, an adviser to the Presidential Office head, said that Ukraine would not receive a tranche from the International Monetary Fund this year. But the state could reach agreements routinely, which permits other funding.

Bohdan Marusyak