The European Union is considering the possibility of significantly tightening the conditions for the payment of a large-scale loan package for Ukraine in the amount of EUR 90 billion. This is reported by Bloomberg.
Receiving part of these funds may directly depend on the implementation of a number of unpopular fiscal reforms, in particular, radical changes in the corporate taxation system. At the center of the discussion was a preferential regime that allows companies to pay only 5% of revenue. International donors and the Ukrainian Ministry of Finance are inclined to believe that such a system not only depletes the military budget, but also distorts market competition, fueling the shadow economy.
According to the proposals currently being discussed in Brussels, official Kyiv should introduce a standard VAT rate of 20% for those business entities whose annual income exceeds UAH 4 million. Although this step may hurt business, Western partners emphasize the need to bring Ukrainian legislation into line with EU standards.
The European Commission confirmed that it is "working tirelessly" on a memorandum of understanding, synchronizing the reform program with the IMF requirements. Representatives of the EU executive body note that the ultimate goal is to strengthen Ukraine's economy and accelerate its integration into the European community.
At the same time, Bloomberg analysts predict that such requirements may provoke serious social tensions within the country. The process of implementing the reforms is complicated by the potential confrontation between the parliament and the Office of the President, as the proposed measures are extremely sensitive for voters.
Despite the fact that the new conditions will not apply to critical defense assistance, the overall financial stability of the state will remain hostage to the authorities' willingness to take unpopular steps. Even if Kyiv manages to postpone these changes now, tax reform and the abolition of benefits remain an inevitable stage on the path to full membership in the European Union.
As Ukrainian News Agency earlier reported, on March 19, the Ministry of Finance presented a bill on tax changes required by the International Monetary Fund, which, in particular, provides for the introduction of taxation of income from digital platforms (the so-called "OLX tax"); setting the military levy at 5% forever; abolishing the benefit for tax-free import of international parcels; introducing VAT for individual entrepreneurs with incomes exceeding UAH 4 million per year.
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