Ukraine's Wartime Tax Hike to Bolster Economy Amid Ongoing Conflict

Ukraine's parliament approved significant tax hikes to support its wartime economy as the conflict with Russia continues. The increased taxes aim to generate vital funds amid rising defense expenditures and economic challenges, highlighting the critical role of foreign aid in balancing Ukraine's budget.

In a decisive move, Ukraine's parliament has approved its first major wartime tax increases in a bid to stabilize the nation's finances amidst the ongoing conflict with Russia. The measure, supported by 247 lawmakers, reflects growing fiscal pressures as defense spending soars.

According to the finance ministry, the adjusted taxation is expected to yield an additional 23.2 billion hryvnias this year, rising to 141.1 billion hryvnias next year. The adjustment comes as Ukraine heavily relies on its revenue to fund military efforts, emphasizing the importance of foreign aid in covering non-defense expenditures.

Under the new law, tax rates will rise for residents and businesses, with banks facing a 50% profit tax. The legislation, which requires President Volodymyr Zelenskiy's approval, will be enforced retroactively from October, alongside increased domestic borrowing and foreign debt restructuring.

(With inputs from agencies.)