Ukraine abandons VAT cut plans
- European News
- 14 October 2013 | Richard Asquith
Ukraine's plans to reduce its VAT rate from 20% to 17% are to be abandoned as the economy stalls.
VAT and corporation tax cuts reversed as economy slides
Ukraine had planned to lower its VAT rate whilst also cutting its corporation tax rate too, backed by one of the country's principle creditors, the International Monetary Fund. However, the economy has slowed since the 2010 announcement, leading the IMF to question whether the tax cuts should go ahead as state revenues fell by over 3% since last year alone, and growth is expected to be zero this year.
The faltering economy and failure to delivery on the consumption tax cut will create additional political tension in Ukraine. It is keen to move away from the Russian trade influence, and work towards membership of the European Union. This includes anti-corruption measures, and the blocking of various tax loopholes.