MP Yaroslav Zhelezniak: Developments in Ukraine’s parliament on economic reforms, international obligations — Issue 76

Editor's note: This is issue 76 of Ukrainian lawmaker Yaroslav Zhelezniak's weekly "Ukrainian Economy in Brief" newsletter, covering events from Sept.

6, 2024. The digest highlights steps taken in the Ukrainian parliament related to business, economics, and international financial programs. The Kyiv Independent is republishing with permission.

Benchmarks and soft commitments in the memorandum with the IMF

The CMU formed a competition commission to select the Bureau of Economic Security director.

On Oct.

4, the Cabinet of Ministers appointed a competition commission to select a new director of the Bureau of Economic Security. Three members of the Commission, selected by the Cabinet of Ministers, are representatives of academic institutions:

1. Tetiana Matselyk, professor of public law at the State Tax University;
2. Yuriy Ponomarenko, dead of the department of criminal law at the Yaroslav Mudryi National Law University;
3. Oleh Hilyaka, associate professor of human rights and legal methodology at the Yaroslav Mudryi National Law University.

Members of the commission submitted by the international partners are:

1. James I. Wasserstrom (USA), anti-corruption expert, particularly in the UN;
2. Laura O.

   Stefan (Romania), anti-corruption expert, former director of a department at the Romanian Justice Ministry, and an international expert on the rule of law for the European Commission and the Council of Europe;

3. Donatas Malaskevicius (Lithuania), former head of the Lithuanian Railways Procurement Agency and former deputy head of the Lithuanian Police, former special attache of the Lithuanian Police in Europol.

The Tax Committee approved the draft law on tax increase, the final reading is scheduled for this week. On Oct.

4, the Committee on Finance, Tax and Customs Policy approved for the second reading draft law #11416-d on the record high increase of taxes. The key provisions haven't changed, such as: increase of the military levy from 1.5% to 5%; introduction of a military levy for individual entrepreneurs; 50% tax on bank profits; increase of minimal land tax; 25% profit tax for financial companies; cash back tax exemption; transition to monthly income tax reporting for economic reservation of conscripts.

Overall 1,388 amendments to the draft law were submitted in the second reading. So far, the Cabinet of Ministers denied a suggestion to replace (at least partly) the increase of the military levy with an increase of value-added tax. Also, all provisions will come into force retroactively from Oct.

1. The draft law is included to the agenda of the Verkhovna Rada's plenary week scheduled for Oct.

8-11.

With few easy options, Ukraine votes to raise taxes on stressed citizens Ukraine's parliament voted to approve a tax hike for the first time since the full-scale war broke out, turning to a politically unpopular move as the country continually struggles to find new sources of funding for its growing wartime budget.

The bill passed in parliament as part of a

The CMU fulfilled another one benchmark from the Memorandum with the IMF. On Sept.

30, the last day of the deadline, the Finance Minitry adopted the methodology to evaluate tax incentives and their financial impact on the state budget. It's structural benchmark #24 of the Memorandum with the International Monetary Fund.

According to the document, the Finance Ministry adopted the relevant resolution on Sept.

27.

Obligations to the EU

This week the parliament will consider several draft laws within the Ukraine Plan. During the parliamentary meetings scheduled for oct.

8-11, the Verkhovna Rada, Ukraine's Parliament, will consider two draft laws which were designed to fulfill Ukraine's obligations under the Ukraine Facility financial mechanism. First of all, the parliament will vote on the final reading of draft law #11310 on the basic principles of state climate policy.

Second, the Verkhovna Rada will consider in the first reading the resubmitted revised draft law #12039 on plea agreements. The new draft law was designed to take into account all warnings of the anticorruption experts regarding the previous draft law on this matter. Ukraine made several steps to meet two requirements of the Ukraine Plan.

Last week, the Cabinet of Ministers of Ukraine adopted the Strategy of Demographic Development until 2040 and signed the technical task for the development of an IT-system to ensure the National Commission for State Regulation of Energy and Public Utilities performs its functions. Both steps were made to meet two indicators of the Ukraine Plan within the Ukraine Facility mechanism, which deadlines were scheduled for the third quarter. The Cabinet fulfilled these obligations on the last day of the scheduled deadline.

Other key economic issues

The Tax Committee recommended for the 2nd reading draft laws on establishing a bank of development.

On Oct.

4, the Committee on Finance, Tax and Customs Policy approved for the first reading draft laws #11238 and #11239 on establishing a National Development Agency (submitted by Danylo Hetmantsev and other lawmakers). As we reported in Issue 58, according to draft laws, the National Development Agency is aimed to be a state specialized institution with a special mandate for the recovery and structural transformation of the economy, which will implement lending programs for the recovery of the country.

Ukraine, Slovakia to create joint energy hub, Shmyhal says "As a result, we will expand our export and import capabilities and strengthen the energy security of both countries," Prime Minister Denys Shmyhal said.

Yaroslav Zhelezniak is the first deputy head of Ukraine's Parliamentary Committee on Finance, Tax, and Customs Policy.

He is also the co-chair of the Ukrainian Chapter of the Parliamentary Network of the World Bank and International Monetary Fund.Read more