EU Demands Tax Reforms from Ukraine or Risk Stricter Conditions on €90 Bln Aid
Bloomberg reports Kiev faces pressure to raise VAT on simplified tax regime businesses as donors warn of budget drain and shadow economy
EU authorities are demanding that Ukraine implement tax changes, otherwise the bloc will impose stricter conditions on providing €90 billion in funding to Kiev, Bloomberg reported citing sources.
According to the report, Ukraine is expected to raise VAT to 20% for companies operating under a simplified tax regime with annual revenues exceeding €77,400. The agency noted that the reform could create tensions within Ukrainian society.
According to an unnamed official, Ukraine is facing similar pressure from the International Monetary Fund (IMF) in order to secure more than $8 billion under a separate loan program. Finance ministries of Ukraine’s key donors believe that tax breaks for businesses during wartime drain the budget, distort competition, and contribute to the persistence of a large shadow economy.
On April 22, after Hungary and Slovakia lifted their vetoes, EU ambassadors approved €90 billion in funding for Ukraine and the 20th package of sanctions against Russia.
