Ukraine Boosts War Taxes Amid Ongoing Conflict

President Zelenskiy has signed Ukraine’s first wartime tax increases to fund its defense sector amid the ongoing conflict with Russia. Key tax hikes include increased war taxes, rental payments, and financial institution profits. These changes aim to raise $3.4 billion for Ukraine’s military efforts.

Ukraine's President Volodymyr Zelenskiy enacted the country's first wartime tax hikes as its conflict with Russia continues into the 34th month. Finance Minister Serhiy Marchenko emphasized the importance of this move to ensure sustainable funding for the defense sector, with the new taxes effective from December 1.

The legislation raises the war tax for residents from 1.5% to 5% on personal income, introduces the tax for individual entrepreneurs, and escalates some rental payments. It also imposes a 50% tax on commercial banks' profits and raises the rate to 25% for other financial institutions, projected to increase revenues by about 140 billion hryvnias next year.

This decision aims to address Ukraine's critical defense funding needs amid the war, as its economy has been severely impacted. The tax hike parallels essential negotiations with the International Monetary Fund, potentially unlocking $1.1 billion in aid, alongside other international financial support, to maintain both defense and humanitarian efforts.

(With inputs from agencies.)