Tax on deposits in Ukraine

In July 2014, the President signed the bill No. 401 "On Amending the Tax Code," which changed the procedure for taxing profits on deposits. Let's consider in more detail the new order of calculations.

A bit of history

For the first time banks about the tax on deposits started talking in2010. Different numbers were called, but in the Tax Code they registered 5%, which were subject to deposits exceeding UAH 200 thousand. Next time, the tax on deposits was revised in 2012. The headquarters was not changed, as this was fraught with the deterioration of social policy.

Changes in 2014-2015

The tax on the deposit of 2014 introduced a cardinalinnovation: banks became tax agents. Deductions are made at the time of accrual of interest. Now banks monthly transfer to the budget withheld amounts without deciphering by depositors, amounts of deposits and accrued income. This is done to preserve bank secrecy. The taxpayers themselves in the declaration will need to reflect only investment profit. The tax on deposits in Ukraine in 2014 was 15%, which was withheld from the deposit amount, which is less than 17 subsistence minimums (19,99 thousand UAH). The new scheme extended to all income accrued after 01.08.14. Most of all, "affected" depositors, who after the specified date the contract expired: the tax on the deposit tripled. The testimonials of the depositors confirm that even attempts to terminate the contract ahead of schedule failed. Banks immediately cut interest rates.

Principles of taxation

This time under the sight hit: interest on deposits, current accounts, certificates and deposits in credit unions, mutual funds, income paid by AMC. In the event of early termination of the contract, the bank recalculates the tax amount, and the interest payment reduces to a minimum. In money terms, the client almost does not notice any changes. To understand how many depositors will have to be transferred to the budget, consider a simple example.

The client invested 20 thousand UAH. at 22% per annum with interest payment at the end of the term. That is, by the end of the contract the bank will charge: 20 х 0,22 = 4,4 thousand UAH. Of this amount 660 UAH. (4.4 x 0.15) will be withheld and transferred to the budget. The client will receive the initial 20 thousand UAH. and 3.74 thousand UAH. as interest income.

In the law there is no loophole, allowing to avoid paying these interests.

Unjustified expectations

It was assumed that the new tax on deposits inUkraine will hardly be affected by demand, as there is no alternative source of income in the country. However, since 2016, citizens of Ukraine began to pay 18% of personal income tax and 1.5% in the form of military fees. Since interest income from deposits is included in the taxable base, it is also subject to personal income tax and military fees.

Capital outflow

Today, experts say that if you canceltax on deposits in Ukraine, then customers will begin to carry funds to the banking sector. As an additional incentive, the NBU Council recommends the CMU to increase the guaranteed amount of the deposit. The last time such a measure was taken in 2012, when the maximum insurance deposit was increased from 150 thousand UAH. up to 200 thousand UAH., or 25 thousand dollars. In view of inflation of the hryvnia today, this amount is equivalent to 7.69 thousand. e.

The tax on deposits in 15% was introduced in 2014. Initially, a progressive scale was envisaged, but at first the rate was 15%, in 2015 it increased to 20%, and in 2016 it was reduced to 18%. Thus, the cancellation of the tax should accelerate the flow of capital into the banking sector. Today, the fiscal burden on the deposit is 19.5%.

Is it really?

The current tax rates makedeposits are practically "zero" in terms of profitability, as the average yield percentage is 14-15%, which does not exceed the level of inflation in 2016. From the economic point of view, it is more expedient to tax revenues during the stability of the banking market. But in Ukraine, the engine of reform is often a crisis. And the introduced tax on interest on deposits helped prevent a financial catastrophe. The state budget received 2 billion UAH in 2014 and another 8 billion UAH in 2015. Although, according to preliminary estimates, it was planned to replenish the budget by 0.5 billion a month.

The situation was aggravated by the general economic background: bankruptcy of banks, whose investors were forced to withdraw their 70 billion UAH through the Deposit Guarantee Fund, and triple depreciation of the hryvnia. Mass outflow of capital from banks could be stopped only by administrative restrictions.

Some statistics

The increased tax on deposits also affectedoutflow of capital. In 2015, after changing rates to 20%, the amount of savings in Ukrainian banks decreased by 36%: from 198 billion UAH. up to 163 billion UAH. Then there was a gradual restoration of deposit deposits. As early as 2016, Ukrainians invested UAH 193 billion, of which $ 73 billion accounted for Privatbank, and in the first quarter of 2017 - 202 billion UAH. Unfortunately, more than 81% of deposits are attracted for up to 6 months, which threatens the crisis of instant liquidity.

The average rate for hryvnia deposits is15 %. The forecast of consumer prices for 2017 was 11%. Given the absence of deflation in June, inflation may reach 14%. In this case, the real profitability of deposits (after the tax on deposits is deducted) is reset. The same applies to currency rates. On average, banks attract dollar deposits at 4.1% per annum. If the real inflation rate is 14%, and the devaluation is 10%, then the yield of the deposit will be zero.

In the absence of the stock market and non-state PFs on the Ukrainian market, deposits are in fact the only tool for raising the population's funds.

Can the cancellation of taxation stimulate the inflow of capital?

Today, investors evaluate banking productson the level of inflation and reliability of the bank. In the conditions of systemic instability, there will be few investors. If the state abolishes the tax on deposits, then the population will have an additional factor of choice, but not the main one.

Releasing deposits from taxation,the state as it shows how the country can make money. In the EU countries, the state picks up about 40% of income from deposits in the form of taxes, in Switzerland, the rates are generally negative. Against the backdrop of the trust of investors to banks, such a system only stimulates the flow of capital. In addition, a European to make a major purchase, you need to spend the amount through financial monitoring. In such a situation it is easier to keep money in the bank at a scanty percentage, so that you do not have to report back to the tax.

If we analyze the revenues to the state budget,it turns out that the amounts transferred in the form of personal income tax are practically comparable with income in the form of income tax. However, the revenue side of the budget forms VAT. The state does not trust the population yet. Tax agents are the employer in the payment of salaries, a notary in the sale of real estate and a bank when paying interest income. None of the listed subjects do this, but none of them can escape from the tax.

Solutions to the problem

If Ukraine aspires to the Europeancommunity, then fiscal policy should be built according to European standards. In order for taxpayers to independently declare their income and pay taxes from all receipts, including from transactions in the securities market, the tax rates should be as unified as possible.

Following the experience of the United States, the state can establishThe list of costs, which can reduce the income at the time of declaration. Such expenses can be attributed to the costs of training, treatment, rehabilitation, re-qualification, energy conservation, etc. Now another scheme works: if the taxpayer has grounds for reducing the amount of tax, he first charges and pays the full amount of the fee, and then applies for a refund overpayments. And in the EU, the accrual mechanism applies to both the family and the individual taxpayer.

In such a system, the tax on deposits will become one of the charges for passive operations, and each taxpayer will be able to choose sources for investment based on his priorities.