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Укр Predictability of tax policy is the key to stability of the banking sector and the economy
The introduction of an additional increased tax of 50% on bank profits will have a negative impact on the banking system retroactively and may lead to a decrease in investment, higher loan prices and revision of deposit rates. This was stated by Andriy Dubas, President of the Association of Ukrainian Banks, in an exclusive commentary for ICTV Fakty. He also emphasized that such changes require a cautious approach, as unpredictable tax innovations could jeopardize the stability of the financial sector and the country's investment attractiveness.
The President of the AUB believes that after the war is won, Ukraine will become a very attractive investment destination. However, the reintroduction of an additional tax for the banking industry is a negative precedent and a bad signal for potential investors. According to Andriy Dubas, this undermines our potential to attract hundreds of billions of dollars for Ukraine in the future.
Andriy Dubas President of the Association of Ukrainian Banks
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- I believe that MPs will pay attention to the appeals of both the business community and our Association before the second reading. We have to weigh the risks and potential short-term minor benefits that this may bring. We, as an Association, have sent letters to all MPs, committee members, the National Bank, the Ministry of Finance, the IMF, and the President of Ukraine to draw attention to the possible risks,” summarized Andriy Dubas.
The AUB President also emphasized that such an approach could negatively affect the banking sector's ability to support the economy, as loans may become more expensive and deposit interest rates may change. In addition, according to him, it is important to warn businesses in advance of any changes in tax policy to avoid chaos and unpredictable consequences. Andriy Dubas noted that state budget revenues have fallen due to the war, so it is impossible to avoid tax increases.
- “Our state budget revenues have fallen significantly. We have lost huge segments of the economy, such as metallurgy, part of the agricultural complex, which is now either mined or occupied. And state budget expenditures have increased significantly, because this is how we finance defense. These are all enormous things. That's why we can't avoid raising taxes, but it needs to be done carefully,” says the head of the AUB.
The Association of Ukrainian Banks calls on government officials and parliamentarians to reconsider the decision to raise the bank profit tax, taking into account the long-term consequences for the economy and the banking sector, including possible outflow of investments and slowdown of economic recovery.
