Ukrainian parliament approves tax amnesty despite IMF scepticism

The Ukrainian parliament approved on Tuesday a tax amnesty bill initiated by President Volodymyr Zelenskiy which will let people voluntarily declare assets by paying a one-time fee to the budget over the next 12 months. Ukraine hopes the move will help it collect additional budget revenues and reduce the size of the shadow economy although the International Monetary Fund, which supports Ukraine with a $5 billion programme, is sceptical.

The Ukrainian parliament approved on Tuesday a tax amnesty bill initiated by President Volodymyr Zelenskiy which will let people voluntarily declare assets by paying a one-time fee to the budget over the next 12 months.

Ukraine hopes the move will help it collect additional budget revenues and reduce the size of the shadow economy although the International Monetary Fund, which supports Ukraine with a $5 billion programme, is sceptical. The draft law stipulated that Ukrainians would have to pay a 5% tax on assets they declare voluntarily.

There is a higher rate of 9% for assets located abroad, such as money deposited in foreign bank accounts, and a lower rate of 2.5% if citizens invest the money they declare in Ukrainian domestic government bonds. The amnesty rule does not apply to state officials or people who are under criminal investigation.

"Tax amnesties often hurt tax collection in the long run because they discourage people from paying their future taxes by making them think there will be yet another future amnesty," the then IMF Representative in Ukraine, Goesta Ljungman, told Interfax-Ukraine in March.

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