The European Union is considering imposing stricter conditions on a €90 billion loan to Ukraine. Part of the disbursement may be contingent on the implementation of unpopular tax changes for businesses.
This information was reported by RBC-Ukraine, citing Bloomberg.
Details of the conditions
The publication notes that the EU is considering making part of the disbursements contingent on the introduction of new tax changes, which may prove unpopular among the business community. Ukraine hopes to receive €8.4 billion in macro-financial assistance as early as this year. This EU initiative coincides with Kyiv’s efforts to persuade the IMF to postpone similar requirements under a financing program worth over $8 billion.
Possible tax changes
Among the possible changes is a revision of the special tax regime for small and medium-sized businesses. Currently, some businesses benefit from a preferential rate of about 5% of revenue, while the new proposal calls for the introduction of a standard 20% VAT rate for companies with annual revenue exceeding 4 million hryvnias. Estimates suggest that such a reform could generate an additional 40 billion hryvnias for the budget annually.
Although the new conditions apply only to part of the overall aid package (which allocates about 60 billion euros for defense), their implementation may prove challenging. The measures are extremely unpopular, and there are already disagreements between parliament and President Volodymyr Zelenskyy regarding tax policy.
