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To Abolish a Tax is a Victory over Offshore

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From 2018, the Ministry of Finance has planned to introduce a capital withdrawal tax instead of a profit tax. The state budget may not receive enough money. However, it is possible that business will start to stop withdrawing money to offshore.

Enterprises pay profit tax (18%) as a difference between its income and expenses. Such a condition is clear for most European countries. However, in Ukraine, this tax has long ceased to show the real financial situation of a company. To minimize payments, accountants learned to lower their revenues and overvalue costs.

As CASE Ukraine Senior Economist Volodymyr Dubrovsky in a commentary to ‘Espreso TV’ suggests, there is a risk of a budget deficit, since the tax was paid in the amount imposed by the tax authorities.

‘There is a large share of enterprises, which paid the income tax by force, according to the plan. As pressure disappears, it will be harder to ‘excavate’ the contributions if the money is not reinvested’, – the expert clarifies. According to him, if one carries out de-offshorization it is possible to cover budget revenues shortcut.

July 10, 2017