By KYIV. Sept 15 (Interfax-Ukraine) – The adoption of bill No. 9656 on the peculiarities of taxation of net interest income of banks on a 5% tax on it can destabilize the financial and government securities market, and will create difficulties for the formation of required reserves by banks, members of the Association of Ukrainian Banks (AUB) believe.
“The tax on net interest income is completely unjustified, since after accrual of net interest income, the bank incurs administrative expenses, labor costs and other expenses for conducting its operating activities,” says a letter from AUB President Andriy Dubas to the relevant parliamentary committee.
“Therefore, the additional tax, logically, should have been initiated from net profit, and not from income, as provided for by bill No. 9656,” the document notes.
According to the association, the bill violates three basic principles of the tax legislation of Ukraine: ensuring the same approach to all tax payers; neutrality of taxation (establishment of taxes and fees in a way that does not affect the competitiveness of the payer) and a unified approach to the establishment of taxes and fees, determination at the legislative level of all mandatory elements of the tax.
Representatives of the banking sector also consider it unreasonable to compare the indicators of previous years with current ones due to the high level of uncertainty and the growth of the portfolio of non-performing loans (NPL) and restructured loans.
In their opinion, comparison with the tax burden of European countries is also inappropriate, since they are not at war and do not face such high risks.
In addition, bankers, referring to Article 4 of the Tax Code of Ukraine, recalled that changes regarding taxes and fees could be adopted no later than six months before the start of the new budget period.
The AUB asked that its representatives be included in committee meetings during the consideration of bill No. 9656.
