The Cabinet of Ministers of Ukraine approved the Draft on the withdrawn capital tax introduction

The Cabinet of Ministers of Ukraine approved the Draft on the withdrawn capital tax introduction

The Government approved the introduction of taxation of corporate income, distributed as dividends or payments similar thereto, as well as the cancellation of tax over non-residents’ profits.

It is expected, the introduction of a withdrawn capital tax instead of the profits tax will be an incentive for businesses to reinvest funds into production and development, as well as simplify tax regulations and administration procedures, and improve the investment climate.

It is noted, implementing the Draft Law in 2018 would result in the state budget losses amounting to UAH 26 billion, and local budgets losses – to UAH 5.4 billion.

It is possible to compensate the budget losses by means of a significant increase of the tax rates or by cost reductions. The Ministry of Finance argues against tax rates increase and considers the reduction of public expenditures and the more efficient disposal of budgetary funds as the only option to find compensators of the said losses.

The relevant Draft Law was approved by the Government on 4 October. Now, looking for the optimal solution as to exactly what kind of costs shall be subject to decrease is pending.