In 2023, Ukrainian banks paid a record 73.5 billion hryvnias in excess profit tax. This indicator is twice as much as it was in all the previous 15 years.
This was reported by the Chairman of the VRU Committee on Taxes and Finances Danylo Hetmantsev.
In terms of financial indicators, the Ukrainian banking system set two historical records last year:
- accrued income tax, which is 10 and 11.5 times higher than a year and two years ago, respectively;
- the highest net profit after tax for all years — 86.5 billion hryvnias, which is four times and 12% more than in 2022 and 2021, respectively.
In the fall of 2023, Ukraine introduced taxation of bank surplus profits at increased rates: 50% in 2023 and 25% from 2024
One of the main reasons for the growth of banksʼ profits is the increase in net interest income, in particular from risk-free transactions with government securities (certificates of deposit, bonds of domestic state loans of Ukraine).
Why the law on additional taxation of banks is important
Adoption of this law is one of the requirements of the International Monetary Fund, from which the government of Ukraine expects $5.4 billion in tranches in 2024. Earlier, the Fund supplemented the Extended Fund Facility (EFF) for Ukraine with four beacons: on the Budget Code, the "5-7-9%" lending program, the State Tax and Customs Service, and the GTS Operator.
The law on taxation of excess profits of banks will provide additional revenues to the budget to finance military expenses.
According to the National Bank, solvent banks of Ukraine for the period from January to September 2023 received a record net profit of 110 billion hryvnias. Last year, for the same period, banks earned only 7.37 billion hryvnias.
Additional taxation has been used many times in the world, when one industry received excess profits not due to additional investments or expansion of production, but due to certain temporary economic conditions — the so-called economic rent. Additional taxes should balance this situation. Earlier, the head of monobank Oleh Horokhovsky claimed that bank clients will suffer from the tax on surplus profits. To maintain the current level of profits, banks will increase interest rates on loans and reduce interest rates on deposits.