13:52 17.09.2024

NBU criticizes increase in bank profit tax to 50%, will announce proposals this week – NBU head

2 min read
NBU criticizes increase in bank profit tax to 50%, will announce proposals this week – NBU head

The National Bank of Ukraine (NBU) considers another increase in bank profit tax to 50% too risky and intends to announce a package of decisions by the end of the week that will ensure banks expand their coverage of the budget deficit by purchasing domestic government bonds, avoiding emission, NBU Governor Andriy Pyshnyy said on Tuesday.

"The risks of such a step (increasing the profit tax to 50%) for solving the problem of financing the deficit and stable growth in lending will be greater than the benefits... The balance is quite fragile and it needs to be supported," he said at the European Business Association event "Global Outlook: Fostering Unity."

According to the head of the NBU, the Ministry of Finance adheres to the same position, although the day before, the first deputy head of the financial committee, Yaroslav Zhelezniak, reported following the committee meeting that the Ministry of Finance supported the tax increase.

Pyshnyy also said that the National Bank sees opportunities to expand the channel for covering the deficit by banks without using emissions, through the purchase of government bonds.

"By the end of the week, we will announce a whole package of relevant decisions," the head of the NBU announced.

In addition, he noted that, in general, the National Bank understands the need to increase the fiscal channel for financing the budget in the context of the protracted war, its continued high intensity and a reduction in external financing.

Pyshnyy clarified that the NBU supported a permanent increase in the profit tax of financial companies from 18% to 25%, in particular, to avoid tax arbitrage with banks, for which this tax was increased from 18% to 25% from the beginning of 2024.

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