By KYIV. Nov 21 (Interfax-Ukraine) – A temporary increase in the bank profit tax from 18% to 50% in 2023 will help the Defense Forces and will not affect the resilience of the banking system, but increasing this tax to 25% in subsequent years creates an unstable situation, Head of the Council of the Independent Association of Banks Ukraine (NABU), Board Chairman of OTP Bank Volodymyr Mudry has said.
“Establishing a tax for the banking system of 50% for 2023 will provide much-needed additional revenue to the budget – approximately UAH 24 billion (or $650 million in equivalent). The Defense Forces really need these funds, and it is our responsibility to make this contribution,” he told Interfax-Ukraine.
Mudry said that almost the entire amount of the additional fiscal effect will be generated by privately owned commercial banks.
According to the head of the NABU Council, raising the tax this year to 50% will not affect the resilience and reliability of the banking system, since the National Bank of Ukraine has already assessed the quality of banks’ assets without identifying risks critical to the system, and the portfolio of loans to legal entities has been growing since July, which means banks are ready to lend.
At the same time, he said that the new tax rates will most affect small banks, “which will continue to be forced to invest hundreds of millions in IT and infrastructure (almost at the level of system banks), but at the same time pay increased taxes.”
“The situation when an increased rate is set for only one industry is unstable, so we can expect additional changes in tax legislation in the near future,” the head of the NABU Council also said, commenting on the new bank profit tax rate of 25% established on a permanent basis.
The National Bank of Ukraine, in response to a request from Interfax-Ukraine, reported that it also supports the possibility of a discussion on the advisability of revising the tax rate of banks on an ongoing basis. “This discussion, taking into account the integration of the banking and financial system into the European Union, should have taken place one way or another,” the NBU said.
According to the regulator, the best time for a thorough discussion on this topic would be a joint discussion on the preparation of the National Revenue Strategy.
