Bank profit tax increased to 50% in 2023 and 25% in subsequent years.

The Ukrainian Parliament adopted a draft law on a temporary increase in the bank tax rate from an 18% to 50% tax on profits in 2023 and a permanent increase to 25% in the following years. The draft law passed in the first reading on October 19 temporarily increased the income tax to 36% in 2024-2025. In 2023, the law prohibits banks from applying losses from previous years to the current year’s profit, but this will become possible again in 2024.

According to the Ministry of Finance, this will bring ₴24-25B ($650M) to the budget in 2023 alone. In following years this amount will be ₴6-7B.

According to the NBU, the net profit from solvent Ukrainian banks for 10 months of the year reached a record ₴109.9B. The Independent Bank Association of Ukraine believes that a bank profit tax increase to 50% will help the defense sector and not affect the banking system’s stability. However, increasing this tax to 25% in the following years will create risks.