20:47 04.10.2024

Member of Ukraine's Council of Seven criticizes govt for tax hike bill

3 min read
Member of Ukraine's Council of Seven criticizes govt for tax hike bill

Ajax Systems founder and member of the Council for Business Support During Martial Law (the Council of Seven), Oleksandr Konotopsky, criticized bill No. 11416d, which proposes tax hikes.

"There's a fierce battle over raising taxes, with slogans like 'we can't feed the military.' But the business community has many questions. We have yet to see significant budget cuts. We haven't seen a plan to combat the shadow economy, such as a minimum wage increase or a customs overhaul," Konotopsky wrote on Facebook on Friday.

According to him, businesses "don't understand" how the government spent budget funds ahead of schedule in the first quarter of 2024 and made capital investments, only to declare that the funds had run out by the end of the third quarter.

He also expressed confusion over the National Bank's decision to impose a six-month limit on personal transfers (P2P, person-to-person) of UAH 150,000 per month starting October 1, 2024, rather than stimulating economic growth and consumption.

Konotopsky also questioned the rationale behind indefinitely raising taxes. His post was supported by fellow Council of Seven member, Artem Borodatiuk, founder of the Netpeak Group recruitment company.

Earlier, in August, Konotopsky said that neither Ukrainian businesses nor citizens were ready for tax hikes and suggested instead that taxes should be lowered. At that time, another Council of Seven member, monobank co-founder Oleh Gorokhovsky, also opposed the tax increases. He called for cutting business support programs instead of raising taxes for small and medium-sized enterprises, and proposed tackling wage underreporting and tax evasion by large businesses.

On September 17, 2024, the Rada passed draft law No. 11416d in its first reading. The law has been criticized by numerous business organizations, including the European Business Association (EBA), the Federation of Employers of Ukraine, the Union of Ukrainian Entrepreneurs (SUP), the American Chamber of Commerce in Ukraine, the Independent Association of Banks of Ukraine (NABU), and the Forum of Leading International Financial Institutions (FLIFI).

On October 4, the Parliamentary Committee on Finance, Tax, and Customs Policy recommended the bill for a second reading with provisions for raising military taxes and introducing a 1% turnover tax for entrepreneurs in the third category and 10% of the minimum wage for categories one, two, and four. The bill also proposes increasing the profit tax for banks to 50% for the entirety of 2024 and raising the profit tax for financial institutions from 18% to 25% starting in 2025.

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