- Ukraine’s Ministry of Economy and Environment proposed creating a special compensation fund for business losses caused by Russia’s aggression, financed by a 1 percentage point increase in VAT.
- The government’s model would cover the “first layer” of losses (up to about USD 10 million per case) through the state budget via the Export Credit Agency, arguing private insurers and foreign reinsurance are not sufficiently capitalized or affordable for these war risks.
- An alternative proposal from think tanks would have the state cover the catastrophic tail risk and subsidize most insurance premiums, financed instead by cutting inefficient budget spending, taxing luxury items, and reducing tax exemptions—without raising VAT.
- Business groups strongly opposed the VAT increase: the Ukrainian Union of Industrialists and Entrepreneurs reported 84.6% of surveyed members rejected an extra VAT rate, calling it unfair to consumers.
- As an alternative, business representatives suggested allowing affected companies to offset future tax liabilities by the amount of documented war-related losses.
Source: news.dtkt.ua
Note that this post was (partially) written with the help of AI. It is always useful to review the original source material, and where needed to obtain (local) advice from a specialist.
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