MPs propose exempting Ukrainians from deposit taxes

MPs propose exempting Ukrainians from deposit taxes

Ukrinform
Ukrainian MPs have proposed exempting individuals' deposits from taxation.

This is stated in bill No. 2422 "On the Introduction of Amendments to the Tax Code of Ukraine Regarding the Exemption of the Population's Deposits from Taxation," which was registered in the Verkhovna Rada on Monday, November 18.

According to the document, the Tax Code is proposed to be supplemented with the following clause: "Zero percent [tax] for interest on a current or deposit bank account, on a deposit in credit unions and on interest or discount income on a nominal savings (deposit) certificate."

The explanatory note to the bill states that since January 1, 2017, law of Ukraine No. 1797-VIII "On the Introduction of Amendments to the Tax Code of Ukraine on Improving the Investment Climate in Ukraine" dated December 21, 2016 has provided that the basic tax rate on deposit income is set at a level of 18%. In addition, each bank depositor is required to pay another 1.5% of the military fee.

Such legislative changes contradict the concept of restoring the banking system and returning capital to it, according to the authors of the bill. The purpose and task of the document is to remove the tax burden from individuals who are banks' depositors, as well as to create additional conditions for attracting funds to Ukraine's banking system from the population.

The tax on deposit interest has been in place in Ukraine since 2014, when personal income tax of 15% was set to "receive passive income" of citizens.

In 2015, the tax rate on deposit interest was raised from 15% to 20%, and a new type of tax – a military fee of 1.5% – was also introduced. Since 2016, the deposit tax rate has stood at 18%. A military fee of 1.5% is also paid. That is, the depositor pays 19.5% of the deposit income to the state budget.

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