On 10 April 2012 at its meeting the Cabinet of Ministers of Ukraine by a solid vote denied the Draft Law on the introduction of the wealth tax.
The Draft Law “On Amending the Tax Code of Ukraine on Implementing of the Wealth Tax” was published on the official web-site of the Ministry of Social Policy of Ukraine in November 2011. It is worth mentioning that the earlier proposed version of the Draft Law contained rather disputable provisions. In particular, the document established up to 20 per cent increase of tax rate on individuals’ salaries exceeding 15 minimum salaries.
The European Business Association strongly opposed additional unreasonable taxation of individuals’ salaries and applied to the Government of Ukraine with the request to eliminate such provision.
Taking into account this concern, the Ministry of Finance of Ukraine has elaborated a renewed edition of the Draft Law on wealth tax, which did not contain the provisions on the increase of the tax rate on personal income. Nevertheless, simultaneously the Ministry of Finance introduced sharper real estate taxation which was not supported by Ukraine’s business community and general public.
On Monday, 10 April 2012, the Cabinet of Ministers of Ukraine has voted down this Draft Law and submitted it for further consideration. Thus the European Business Association continues to advocate the following:
- Clarification of the concept and criteria of “wealth” and “luxury”;
- Making consumption a wealth tax base, as well as significant assets (movable and immovable property), and passive incomes (dividends, royalties etc.), received by the taxpayers in Ukraine and controlled by their structures abroad;
- Introduction of fair tax rates on certain assets (large real estate, some categories of vehicles etc.) providing tangible revenues into the state budget;
- Introduction of households’ taxation instead of individuals’ taxation (as it is necessary to consider the existence of family, their total income, child rearing etc.).
The EBA hopes that the reform of the general taxation system will be fast and efficient, and the legislative initiatives aimed at implementing tax on luxury goods in Ukraine will be well-accepted by Ukrainians and fill the budget at the expense of super profits, rather than out of salaries, i.e. monetary equivalent of labour.