The Ukrainian government will increase military levies on entrepreneurs under pressure from the IMF

Ukrainian authorities are preparing to raise taxes for individuals and businesses. The first to face increased rates will be individual entrepreneurs. As stated by the head of the relevant committee of the Rada, Danil Hetmantsev, the Cabinet of Ministers will submit a bill to parliament this month on an additional military levy for entrepreneurs.

This involves introducing a military levy of 1.5% of turnover for third-group individual entrepreneurs, although they currently do not pay such a levy. It is possible that the military levy will also be increased for first and second-group individual entrepreneurs, who currently pay the standard 1.5%. The updated memorandum with the IMF stipulates a structural milestone — finding sources to mobilize at least 0.5% of GDP into the budget, which is approximately 1 billion euros. Ukraine was supposed to fulfill this task by the end of February 2024. Additionally, the government needs to find additional sources to replenish the treasury, as a significant portion of assistance from Western partners is in question.

As Hetmantsev stated, the government will prepare a “package of proposals” to increase the revenue side of the budget by more than a billion euros, including additional taxes on the purchase of precious metals, additional fees for the first registration of vehicles in Ukraine, additional fees for the sale of real estate, additional fees for the sale of jewelry, excise taxes on sweet and carbonated beverages, additional fees for mobile operators, raising fuel excise taxes to the minimum European rates and more. However, inconsistency, distrust and a return to the ideology of aggressive tax collection are negative, if not fatal, initiatives for the recovery of the economy of a country at war. This will lead to nothing but further driving a significant portion of the business into the shadows and transitioning to gray payment schemes.