Minimum wage to be untaxed effective 2016, - Deputy Finance Minister

Finance Ministry proposes to set a zero tax rate to the entire size of the minimum wage from January 1, 2016.

As reported by Сensor.NET citing Ukrainska Pravda, this was announced by the Deputy Finance Minister Olena Makeieva in an interview to Channel 24.

"Today, in Ukraine, only 50 per cent of the minimum wage is untaxed - 609 UAH (about $27) are subject to a zero personal income tax. Effective Jan. 1, the minimum wage will not be taxed," she said.

According to Makeieva, business primarily expects lifting of a wage funds burden, which now reaches 50 per cent.

"Most European countries do not impose such tax burden," she said.

The deputy minister also announced reduction of the unified social tax (UST), with its average value making 41 per cent by now. The IMF proposes to lower the rate to 28 per cent, but the Ministry of Finance may reduce it even more, provided compensation is found.

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Makeieva says the UST reduction by 1 per cent leads to a five-billion UAH (about $226.3 million) loss for the budget.

According to her, cancellation of a special VAT regime to farmers (which will additionally attract some 11 UAH billion (about $498.02 million)), legalization of gambling, prevention of smuggling and tax pits will compensate for the reduction.

Makeieva says the Finance Ministry does not expect the tax reform to rapidly deshadow the economy, as business will take a wait and see position.

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"According to other countries' experience, there is a zero deshadowing during the first year. Because business does not believe these rules will last for more than 3-4 months. Therefore, it will be waiting for six months, eight months, checking whether everything is stable," she said.

In this regard, the ministry will come up with a proposal to introduce at least a three-year ban on any changes to the tax code.Источник: https://censor.net.ua/en/n348252
Source: Interfax-Ukraine