Ukraine Parliament To Consider 25% Deposit Tax

By Tatiana Smolenskaya, Tax-News.com, Moscow

07 March 2013

Ukraine's parliament is to consider draft laws which would ban foreign-currency bank deposits and introduce a 25% tax on interest on deposits in banks and other financial institutions in circumstances where the interest received is more than 5% above the rate set by the National Bank of Ukraine.

The proposed amendments to banking and tax legislation were put forward by Yevhen Sihal, who is a member of the country's ruling Party of Regions. In an explanatory note submitted with the drafts, he argued that the higher tax rate will encourage consumer spending, reduce the cost of business loans, and provide extra funding for the country's Pension Fund. Sihal also explained that his tax proposal is based on the experience of the Russian Federation.

Sihal's proposals have united the National Bank of Ukraine (NBU) and the country's Communist Party in opposition. The NBU was quoted as saying that it was concerned about the politicization of economic issues, and that its policy was to increase the deposit base in line with international practice, while Communist leader Petro Symonenko suggested that the owners of large deposits will simply move their funds abroad to avoid the tax.

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