The Memorandum of Economic and Financial Policies was Approved: the Obligations of Ukraine

On 19.12.2022, the Board of Governors of the IMF approved the Letter of Intent and the Memorandum of Economic and Financial Policies, which contain measures implemented and planned to be implemented by the Government of Ukraine and the NBU during the period of validity of the Program Monitoring with Fund Board Involvement in 2022-2023.

According to the Memorandum, Ukraine undertook certain obligations in economic and tax policy, in particular:

  • to cancel the moratorium on tax audits;
  • to restore the pre-war taxation regime for taxpayers, in particular, to cancel the business’ right to use 2%simplified taxation system;
  • to limit the possibility of income tax evasion using the private enterprenurs (PE) of Group 3 (so-called “salaried” PEs);
  • to return the VAT rate from 7% to 20% and excise duty on fuel to the pre-war level;
  • to retain the NBU discount rate at 25% at least until the second quarter of 2023.

According to the statement on the official website of the Cabinet of Ministers of Ukraine, the Program Monitoring with Fund Board Involvement will help catalyze donor financing and pave the way toward a fully-fledged Fund program.