The repeated retrospective increase in the bank profit tax from 25 to 50% has led to a reduction in the capital of the banking system. This, in turn, has reduced the banks' ability to increase their loan portfolio by 20%. This was reported by the First Deputy Head of the National Bank of Ukraine, Kateryna Rozhkova, to the Interfax-Ukraine agency.
► Subscribe to the telegram channel “Minfina”: the main financial news
“Overall, the potential of the banking system remains significant: at the moment, banks can at least double their loan portfolio without violating capital adequacy requirements. However, for some banks, this potential has significantly decreased,” Rozhkova noted.
NBU concerns: war and potential asset losses
Rozhkova recalled that the National Bank's main concerns were related to the fact that the war in Ukraine continues, and banks may face additional asset losses and deterioration in the quality of their loan portfolios. This, accordingly, will require additional capital.
“We call on banks to step up lending and offer borrowers acceptable interest rates, and for this, a sufficient capital reserve is needed. We hope that such unforeseen steps (like tax increases – ed.) will not happen again,” the first deputy head of the NBU emphasized.
Arbitration issues due to different tax rates: banks, financial companies, other economies
Commenting on the issue of possible arbitrage due to the difference in profit tax rates (50% for banks, 25% for financial companies and 18% for the rest of the economy), Rozhkova noted that the banking sector is one of the most transparent in Ukraine. It has undergone a corporate governance and reporting reform, so most banks do not abuse such schemes.
Tax levels for banks and financial companies
“At the same time, taxation of such markets should be the same. Therefore, establishing a single tax rate for banks and financial companies is a justified step,” she said.
🕵️ We created a short survey to learn more about our readers.
💛💙 Your answers will help us become better, pay more attention to the topics that interest you.
🤗 We would be grateful if you could take a minute to answer our questions.
- Banks