Turnover tax in bill on tax increases is likely to be replaced by increase in VAT - Hetmantsev

The military levy (ML) on legal entities of 1%, which is actually a turnover tax, will be excluded from the government bill No. 11416 on raising taxes and will probably be replaced by value added tax  (VAT), the head of the specialized parliamentary committee, Danylo Hetmantsev, said based on the results first consultations with business.

"Regarding the first sketches of the architecture of changes to the tax bill of the Cabinet of Ministers. The contours are not yet fully understood, but I agree with business that the 1% turnover tax will not pass, thanks God. We definitely do not need a new complex tax," he wrote in his Telegram channel.

"It is proposed to replace it with VAT, and in this case most of the small, fiscally insignificant point changes will fly away, we will consider them separately, and some will be rejected," the head of the committee added.

According to him, the additional ML on salaries and individual entrepreneurs (IE) without exceptions for some industries may remain in the law, but it will be supplemented with changes aimed at de-shadowing, in a revised edition with business.

Hetmantsev also emphasized that an agreement has already been reached that the increased taxes will be introduced only for the time of the war.

The first deputy chairman of the committee Yaroslav Zhelezniak (the Holos faction) added that the business demands that the state reduce costs and carry out customs reform.

"From the bad news: for now, the "turnover tax" is all that we are willing to give up. And then, I just replaced it with an increase in VAT. All other innovations remain, despite the comments. Therefore, do not expect big changes there," the MP wrote in the Telegram.

He added that the bill will be presented to the Verkhovna Rada on the 20th of August and, most likely, it will be a revised text.

At the same time, Zhelezniak believes that the bill will "fall apart in the session hall", since there are no votes for it yet.

Hetmantsev noted that consultations with businesses will continue on Monday.

As reported, on July 18, government bills on amendments to the 2024 state budget regarding financial guarantees of the security and defense sector (No. 11417) and amendments to the Tax Code and other laws on the peculiarities of taxation during the period of martial law (No. 11416) were registered in the Verkhovna Rada. The latter provides for an increase in taxes by UAH 125 billion this year and UAH 341.9 billion next year.

Among the main initiatives of the government is an increase in the rate of military levy on the income of individuals from 1.5% to 5% (estimated additional income is about UAH 45.5 billion) and the payment of it by individual entrepreneurs in the amount of UAH 800 per month (UAH 2.3 billion), and as well as the introduction of a military levy for legal entities and individual entrepreneurs of the 3rd group in the amount of 1% of income (UAH 50.5 billion).

It is also proposed to increase or introduce, where it currently does not exist, a military levy of 5% on mobile communications (UAH 0.9 billion), the purchase of bank metals (UAH 0.02 billion) and real estate (with the exception of one object per year ) (UAH 1.2 billion), 15% - for the purchase of passenger cars for their first registration in Ukraine (UAH 10.2 billion) and 30% - for the purchase of jewelry with payment of it by retailers (UAH 0.14 billion).

Among other innovations is the monthly payment of advance payments from the corporate income tax by fuel retailers in the amount of UAH 0.5 million per 1 cubic meter of fuel storage tanks (UAH 8.3 billion), establishing a specific excise tax rate of EUR 0.1 per 1 liter of beverages with added sugar or other sweeteners (UAH 2.4 billion), lowering the threshold for duty-free parcels from abroad from EUR 150 to EUR 45 (UAH 3.3 billion).