kraine Considers Extending 50% Corporate Income Tax Rate for Banks in 2027: AUB Warns of Risks to Lending and Economic Recovery
On 27 October, the Verkhovna Rada of Ukraine adopted Draft Law No. 15262 at first reading with 265 votes in favour. On 5 November, the Verkhovna Rada Committee on Finance, Taxation and Customs Policy recommended that the draft law be adopted at second reading and in its entirety. The draft law proposes extending the 50% corporate income tax rate for banks through 2027 and prohibiting banks from reducing their taxable profits by the amount of losses incurred in previous years.
According to Danylo Hetmantsev, Chair of the relevant parliamentary committee, the increased tax rate is expected to generate an additional UAH 38.5 billion in state budget revenues in 2027.
“Over the three years during which the 50% rate has been in effect, additional revenues have not exceeded 1.5% of total state budget revenues. The cost of these revenues to the economy is hundreds of billions of hryvnias in loans that businesses will not receive. The Association of Ukrainian Banks considers this ratio economically unjustified and calls on MPs not to support Draft Law No. 15262 at second reading,” said Andrii Dubas.
A Temporary Tax Being Introduced for the Fourth Time
Since 2023, the rules governing the taxation of bank profits in Ukraine have changed repeatedly. Before the full-scale invasion, banks paid corporate income tax at the rate of 18%, just like other businesses. Subsequently, the basic rate for banks was increased to 25%, while the rate for other businesses remained at 18%.
The 50% rate has been applied three times: to profits earned in 2023 and 2024, in both cases retroactively, and also for 2026. The latest decision was adopted by Parliament on 3 December 2025, less than a month before the beginning of the new year. Draft Law No. 15262 now proposes extending the increased tax rate for another year.
Such decisions affect banks’ ability to plan their operations, build capital and attract long-term investment.
“The banking sector and investors need clear and predictable tax rules for years ahead. The Association of Ukrainian Banks proposes abandoning annual decisions to increase the tax rate and returning to a predictable tax policy. We are ready for substantive discussions with the Ministry of Finance, the National Bank and the relevant parliamentary committee,” emphasised Andrii Dubas.
The economic consequences of increased bank taxation have been analysed by experts from Ukraine Economic Outlook. The study examines more than 50 cases of such taxes worldwide over the past 25 years. According to its authors, in almost all cases, actual budget revenues were significantly lower than initially projected.
In Ukraine, according to the study, additional revenues generated during the years when the 50% rate was in effect amounted to approximately UAH 39–48 billion annually, or 1–1.5% of state budget revenues.
However, budget revenues are only one part of the economic impact. Higher taxation reduces the profits banks can allocate to strengthening their capital, thereby affecting their capacity to finance businesses.
Why Higher Taxes Can Restrict Business Lending
According to the National Bank of Ukraine, generating an additional UAH 20 billion in budget revenues could result in a loss of UAH 200–300 billion in potential lending capacity for the economy. The regulator warns that repeated withdrawals of bank profits could limit annual lending growth to 15–20%.
This risk is particularly significant for Ukraine. According to Ukraine Economic Outlook, in 2024, loans to the private sector accounted for just 18.2% of GDP — the lowest level among European countries. The loans-to-deposits ratio stands at 35–37%.
This means that the Ukrainian economy already faces a substantial shortage of credit financing. Additional tax pressure could constrain lending growth precisely when businesses need resources to restore production, modernise equipment and invest.
The Ukraine Economic Outlook study also examines who ultimately bears the cost of higher taxation. Its authors refer to findings by economists at the Bank of Italy, according to which banks may pass on up to 90% of the tax burden to customers, primarily through higher lending rates.
“Lending in Ukraine is experiencing its longest period of growth in the past 15 years. Every hryvnia of capital withdrawn from banks reduces the volume of loans available to businesses, the energy sector, the defence industry and agricultural producers. Ultimately, borrowers bear the cost of this tax,” added the AUB President.
How Other Countries Tax Bank Profits
A comparison with other countries shows how significantly Ukraine’s 50% rate differs from the tax conditions in neighbouring markets.
In Poland, the corporate income tax rate for banks was increased from 19% to 30% in 2026, with a gradual reduction planned to 26% in 2027 and 23% from 2028 onwards.
Since 2026, Kazakhstan has applied a 20% tax rate to banks’ income from business lending. Other banking income, including income from government bonds and consumer lending, is taxed at 25%.
In Georgia, the corporate income tax rate for banks is 20%.
In Romania, banks pay 16% corporate income tax and an additional 4% tax on turnover. According to the Romanian Banking Association, the combined tax burden reaches approximately 33% of profits.
A direct comparison of tax rates does not capture all the specific features of national tax systems, as countries apply different tax bases and additional levies. Nevertheless, these examples demonstrate that the proposed 50% corporate income tax rate for Ukrainian banks remains among the highest.
International Experience: How Additional Taxes Affect Banks and the Economy
Experience in other countries shows that higher bank taxation can affect the investment attractiveness of the sector, the structure of bank assets and the availability of credit.
In 2023, the Italian government planned to raise approximately EUR 3 billion through a tax on banks’ excess profits. However, following the announcement, banking stocks lost more than EUR 9 billion in market capitalisation in a single day. The government subsequently eased the conditions, allowing banks to allocate an amount equal to 2.5 times their tax liability to reserves instead of paying the tax. Most large banks opted for this alternative, meaning that the budget received virtually none of the expected revenues.
In Romania, in December 2018, the government announced the so-called “greed tax” on banks, alongside new taxes on energy companies. Against the backdrop of these decisions, the main Bucharest Stock Exchange index, BET, fell by more than 11% in a single day, while shares in the largest banks declined by 17–20%.
In Hungary, a tax on bank assets introduced in 2010 as a temporary measure is still in force. According to Ukraine Economic Outlook, during this period, the level of lending to the economy fell from 60% to 30–35% of GDP.
In Poland, following the introduction of a tax on bank assets, financial institutions began shifting some of their resources away from business lending towards government bonds, which were exempt from the tax.
The United Kingdom adopted a different approach. In 2023, the government reduced the special bank surcharge on corporate income tax from 8% to 3%. This decision helped contain the overall tax burden following an increase in the basic corporate income tax rate and supported the competitiveness of the financial sector.
These examples demonstrate why tax decisions should be assessed beyond the expected amount of budget revenues. Investor reactions, changes in the structure of bank assets and reduced lending capacity can have long-term consequences for the economy. At the same time, these indicators are also influenced by other economic factors, so each country’s experience requires an individual assessment.
For Ukraine, where bank lending remains one of the key sources of business financing, preserving bank capital and ensuring predictable tax policies are particularly important. These are also among the risks highlighted by the International Monetary Fund.
IMF Position: The Tax Should Remain Temporary
In its July review of Ukraine (Country Report No. 26/188), the IMF warned that repeatedly taxing banks’ excess profits entrenches economic distortions, encourages tax avoidance and limits banks’ ability to build capital for lending and post-war recovery.
The Fund recommended phasing out this tax after 2027 in favour of more effective and sustainable fiscal policy measures.
The IMF’s position underscores the importance of considering the long-term consequences of tax decisions. For Ukraine, the key issues are banks’ ability to attract investment, strengthen their capital base and expand financing for the economy amid the war and future reconstruction.
The Association of Ukrainian Banks calls on the Verkhovna Rada to take these risks into account during the second reading of Draft Law No. 15262 and reject the extension of the 50% tax rate for 2027.
The key question is whether the expected additional UAH 38.5 billion in budget revenues justifies the risk of losing hundreds of billions of hryvnias in potential lending resources. The AUB believes that tax policy must take into account not only short-term budgetary needs but also banks’ capacity to finance business development and the recovery of Ukraine’s economy.
