EBA calls on Rada to reject bill on increasing taxation of bank income

The European Business Association (EBA) calls on the Verkhovna Rada to reject the bill on increasing taxation of bank income.

This is announced in the EBA statement, Ukrainian News Agency reports.

"The banking community, united by the European Business Association, the National Association of Banks of Ukraine and the Forum of Leading International Financial Institutions, appealed to the Chairman of the Verkhovna Rada of Ukraine Ruslan Stefanchuk and MPs with a request to reject the bill No. 14097 "On Amendments to the Tax Code of Ukraine Regarding the Features of Taxation of Banks with Corporate Income Tax in 2026", the report says.

The document provides for a temporary increase in the bank income tax rate to 50% with a ban on taking into account losses from previous periods, which may have a number of negative consequences for the banking sector and the economy of Ukraine as a whole, such as:

- the increased burden will complicate the formation of capital buffers necessary to meet the requirements of European integration and increase the stability of banks. After all, the key source of capital for this is the profit that banks will receive this and next year;

- an increase in the risk of capital shortage, which may limit lending to businesses and citizens, jeopardizing economic recovery.

It is noted that according to the NBU estimates, 9 banks, including 2 banks with a state share, are required to implement recapitalization measures.

8 of these banks will most likely not be able to implement recapitalization programs if the bill No. 14097 is adopted.

The association reported that the document's proposals violate the principles of stability of tax legislation, determined by the Constitutional Court of Ukraine.

According to this principle, changes to the bank profit tax rate adopted after July 1, 2025 cannot be applied earlier than in the 2027 budget year.

"In addition, if the bill is approved, this will be the third year when bank profits are taxed at more than double the rate (50%) compared to other industries (18%). The total amount of profit tax paid by banks to the budget for 2023 and 2024 is over UAH 170 billion. Such an inflated tax rate is not only unjustified, but also unconstitutional, as it violates Article 42 of the Constitution of Ukraine: "The state ensures the protection of competition in entrepreneurial activity," the EBA emphasized.

Business also draws attention to the fact that the adoption of the bill will negatively affect the investment attractiveness of Ukraine, especially in the context of the planned privatization of state-owned banks JSC Sense Bank and JSB Ukrgasbank, as constant changes in tax rules undermine investor confidence and create permanent uncertainty for business.

The banking community calls on MPs to prevent these risks from deepening and ensure the predictability of tax policy.

As Ukrainian News Agency earlier reported, the Verkhovna Rada supported in the 1st reading an increase in the bank profit tax rate to 50% in 2026.

During 2023-2024, the state made decisions on taxation of banks' excess profits at the end of the year.

But this year the tax was not raised and banks will pay corporate income tax at a base rate of 25%.

Banks earned a record-breaking UAH 106.4 billion in 8 months in the entire history of Ukraine's independence; in August, bank profits amounted to UAH 13.6 billion.

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