The Finance Ministry of Ukraine will soon decide whether single social security tax and individuals' income tax are united into one tax, or if the existing model should be retained, Deputy Finance Minister Olena Makeyeva has said.
“Now we’re at the final stage when we are to decide,” she said at a press conference in Kyiv on Aug. 20.
She said that in general, there are no doubts that the taxation burden on salaries should be reduced.
“Only the model and rate are left to select,” she said.
Makeyeva said that the two above-mentioned models have advantages and flaws. She presented the flaws of uniting the two taxes: the absence of the real replacement of the Pension Fund and a risk that employers would refuse to increase salaries for employees.
“On the other hand, the merger of individuals’ income tax and single social security tax is facilitation, but this could be achieved with the present model via relaxing of administration,” she said.
Commenting on the rates, Makeyeva said that the country would not return to the idea of expanding the progressive scale of individuals’ income tax as international donors proposed.
“There are proposals to set 20 percent, 25 percent and 28 percent rates. However, we understand that expectations of business are not 28 percent of individuals’ income tax, but lower. We hope that it would be lower in the model that would be presented by the minister,” she said.
She said that the Finance Ministry would present draft tax reform at a meeting of the National Reforms Council next week, and Finance Minister Natalie Jaresko would present it by the end of August.
