Ukraine: First wartime tax increase passed, aiming to raise billions for weapons and soldier salaries

(Patria) - The Ukrainian parliament has adopted its first wartime tax increase to bolster the country's finances given the war that has been ongoing for two and a half years with no end in sight.

Yaroslav Zheleznyak from the Holos party stated that 247 out of 450 deputies in the Verkhovna Rada voted for the tax increase.

The Ukrainian government proposed a tax increase for the first time since the start of the war in July, aiming to raise billions of dollars for weapons and soldier salaries.

The Ministry of Finance announced that the new taxation will strengthen the budget by 23.2 billion hryvnias this year, and bring in 141.1 billion next year.

For Ukraine, foreign financial assistance remains crucial for the country's budget.

The Ministry emphasizes that all non-military spending is exclusively financed by Ukraine's international partners and that these funds must not be used for military purposes.

Since the beginning of the Russian invasion, Ukraine has received nearly $100 billion in economic aid from the West for public sector salaries, pensions, and other social spending.

Kyiv needs an additional $12 billion by the end of 2024 for defense. The budget deficit for next year is expected to be $38 billion.

According to the new law, the wartime tax for individuals increases to 5% from the current 1.5%, taxes for individual entrepreneurs and small businesses are rising, and a 50% tax on bank profits and a 25% tax on financial company profits are being introduced.

The new tax system will apply retroactively, from the beginning of October. Along with new taxes, the government has increased borrowing on the domestic market and restructured foreign debt, which should save $11.4 billion over the next three years.