Eng 
Укр Introduction of excess profit tax: Association of Ukrainian Banks and Crowe discussed challenges for the banking sector
On September 27, 2024, the Association of Ukrainian Banks, together with Crowe Mykhaylenko, held a webinar dedicated to topical issues of taxation and inspections of banking institutions. During the event, participants discussed changes in tax legislation and their impact on the financial sector.
The top news of the webinar was the introduction of a tax on excess profit of banks at a rate of 50%. The government decided to apply this tax retroactively, which will require recalculation of tax liabilities for the first 9 months of 2024 and the annual period. This innovation aroused considerable interest among banks, as it will significantly affect their financial activities.
In addition, participants discussed an increase in the military levy and possible alternatives, including an increase in the VAT rate. The financial sector, which mostly operates without VAT, welcomed this option, as it has a less negative impact on bank operations.
The webinar also discussed the application of the rules for the recovery and resale of mortgaged property by banks.
This issue is regulated by the norms of the Tax Code:
197.12 - exemption from taxation of bank transactions with property subject to recovery, within the value received from the mortgagor.
189.15 - VAT taxation of part of the value of property that was sold for an amount exceeding its initial value.
The taxation of these transactions depends on the tax status of the mortgagor and the transfer of ownership of the property. In the event that the bank receives ownership of the property, the rules for reflecting tax liabilities and credits, which is regulated by Articles 197.12 and 189.15, apply. If the property is transferred with VAT, the bank must reflect tax liabilities in accordance with Article 198.5
This meeting became a key platform for the exchange of views and experience between banks, financial experts and regulators, providing an in-depth discussion of current issues of taxation and tax audits.
The Association of Ukrainian Banks always takes an active part in important discussions and initiatives that contribute to the development of the country's financial sector. AUB always ensures effective communication between financial institutions and regulators, contributing to improving conditions.
