Ukraine backs down from funded second pillar of pension reform in 2019, – IMF memo

Source : 112 Ukraine

During the program, there will be no new tax exemptions or privileges, no reducing or altering corporate income taxation, etc.
12:49, 20 December 2018

Ukraine would suspend the introduction of elements of the funded second pillar to the pension system for the period when the new Stand-By Arrangement (SBA) with the International Monetary Fund (IMF) is in effect. This is stated in the Memorandum of Economic and Financial Policies of the authorities of Ukraine, Interfax-Ukraine reports.

"In early 2019, we will remove the caps on the base for the social security contribution assessments," the government said in the document.

According to the document, there will be no granting of any tax amnesty for the period when the SBA is in effect, but this would not limit a possibility of holding the campaign of declaration of assets of individuals, which is subject to the preliminary approval of its conditions with the IMF.

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"During the program period we will refrain from: introducing new tax exemptions or privileges; reducing or altering corporate income taxation (CIT) directly or indirectly by replacing the CIT regime… We will continue to work with IMF staff to develop proposals to improve corporate taxation and make the tax system more growth-friendly, but will not enact any legislation during the program period that changes our tax system such that it will undermine the fiscal sustainability," the Ukrainian authorities said in a letter of intent signed by the president, prime minister, finance minister and governor of the National Bank of Ukraine (NBU).

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The Finance Ministry of Ukraine said in a press release on Thursday that Ukraine will continue the dialogue with the IMF, looking for a possibility of introducing the exit capital tax in the fiscally neutral form, and the balanced and stable model of distributed profit taxation.

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As we reported earlier, the IMF published the text of the Memorandum on the economy and fiscal policy within the new program for 2018-2020.

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