The chair of the Verkhovna Rada committee on finance, tax and customs policy, Danylo Hetmantsev, said that Ukraine does not plan to raise the value-added tax (VAT) or other taxes to fund insurance for businesses against wartime risks.
“There is no chance of raising VAT or any other taxes. Minister Oleksandr Kravchenko has developed a reasonable mechanism for insuring against military and political risks. The question is the resources to implement it, which, unfortunately, are not available at the moment. But that does not mean we should stop looking for solutions to support business,” the MP said in a Facebook post.
The government is seeking alternative sources to support enterprises
Prime Minister Serhii Koretskyi wrote on his Telegram channel that the government is looking for alternative measures to help entrepreneurs amid intensified attacks on logistics and production. He said various options are being considered given limited financial resources, and that the government has heard the position of the business community.
Koretskyi added that, together with Minister of Economy Oleksandr Kravchenko, they explained the government initiatives and discussed possible ways to support enterprises.
Business opposes raising VAT to 21%
Entrepreneurs have expressed categorical disagreement with the idea of financing wartime insurance by raising VAT from 20% to 21%. Ihor Humennyi, president of UBC Group and vice-president of the Union of Ukrainian Entrepreneurs, emphasised that business supports the introduction of wartime insurance but opposes any additional tax burden on consumers and the legitimate private sector.
“We are for insurance. But we are categorically against raising VAT to finance it. Insurance should be paid in line with the risk, not with consumption levels. All Ukrainians would pay for business insurance,” Humennyi said. He also proposed a model of voluntary contributions on the principle of comprehensive auto insurance (kasko), with state and donor assistance only for catastrophic losses.
Which fund mechanism was considered and what proposals were made
In September the government considered creating a special state fund to compensate businesses for losses from shelling of about $1 billion. One proposed financing source was an increase in the VAT rate by 1 percentage point from 20% to 21%; it was also expected to attract $1−2 billion from international partners.
Earlier, People’s Deputy Yaroslav Zhelezniak said the government had allegedly abandoned the idea of raising VAT by 1% and currently does not plan to create a fund for business aid and insurance. He said that among other initiatives affecting business were blocking VAT refunds of 18 billion UAH and reviewing rules for reserving workers; he argued that support should be provided in the budget and unnecessary spending cut instead of raising taxes.
