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Currently, the Fund is currently studying Poroshenko’s bill.
The World Bank, pointed out recently that the new scheme is unacceptable due to a risk of losing tax revenue. Most countries rely on taxing corporate profits for revenue and only a few have switched to taxation of distributed profit, the bank said. Most of these countries have lost a large share of their revenue from taxing profit during this switch and this loss is inadmissible for Ukraine now, according to the multinational lender.
According to the World Bank's lead economist and programme leader Faruk Khan, in the near future Ukraine would need large volumes of financing for servicing foreign liabilities and cover fiscal needs. In this situation Ukraine should retain its current level of tax revenue, according to Interfax news agency.
The exit capital tax says businesses do not need to pay a 20% profit tax if they invest this money in the development of their domestic businesses. For foreign investors, the innovation suggests that the tax rate will be fixed at 15%, whereas now companies pay up to 25% on profits, according to news agency Ukrnews.
"This should not be the business of the president. This should be the business of our united team. Then we will win just as we won during the voting on the currency bill," Interfax quoted Poroshenko as saying on June 4. "Do you agree that this will be our joint fight for Ukraine's economic freedom? Then let's start fighting."
Poroshenko also said that the rapporteur on the bill in the parliament would be his representative in parliament, Poroshenko's Bloc lawmaker Iryna Lutsenko.
The president added that the law on exit capital tax will come into force only together with other compensators for the state budget revenues. "I declare that this bill does not and will not cause any conflicts with the IMF, since this bill will come into effect only when respective compensators are provided for in the budget."
Poroshenko has previously postponed submitting the bill to the Verkhovna Rada.
Meanwhile, former Finance Minister Oleksandr Danylyuk said recently that the exit capital tax could become corrupt in two or three years if there was no a clear and transparent mechanism for its introduction.
"Not all business supports the exit capital tax, but the Finance Ministry has drafted an appropriate bill... The question is how it will be implemented. [...] The exit capital tax can successfully become corrupt in two or three years," the minister said more than a month ago, adding that the ministry was working on finding compensators.
At the same time, he also said that for this decision the position of the Finance Ministry is not enough, it should be taken at the level of the National Security and Defence Council (NSDC).
7 UKRAINE Country Report August 2018 www.intellinews.com