NEW TAX PROPOSAL FOR SMARTPHONES CLOTHING AND LUXURY PRODUCTS

Smartphones, clothing, and luxury items: Ukraine proposes a new tax
This initiative could become an alternative to the government’s proposal to increase the value-added tax (VAT) by one percentage point.
Ukraine is proposing a tax on non-critical imports, including mobile phones, clothing, and luxury goods. The proceeds could be used to replenish an insurance fund to compensate businesses for war risks.

Ukrainian MP and Verkhovna Rada coordinator of the “Made in Ukraine” policy, Dmytro Kisilevsky, told UNIAN about this.

“A good option for replenishing this fund (for insuring businesses and industry against war risks, – UNIAN) would be an import levy on non-critical imports. We currently import a great deal of goods, weapons, and fuel. These are critical imports. But we also import mobile phones, premium goods, clothing, and other items. At the same time, we have a catastrophic trade imbalance. That is, we import significantly more than we export. Therefore, if we were to introduce a levy on non-critical imports, we would have an alternative source of replenishment for the fund, which could be used to insure war risks,” the MP said.
He recalled that the government had proposed creating an insurance fund to expand the scope of business and industrial insurance against war risks. Kisilevsky noted that Ukraine currently has two business insurance support programs in place, but their capacity is insufficient to cover the scale of the destruction.
“Currently, we only have two war risk insurance programs in effect: one for frontline areas, the city of Kyiv and the Kyiv region, where loss coverage is up to 30 million hryvnias. The second program compensates for the cost of insurance up to 5 million hryvnias,” Kisilevskyi explained.

He noted that the scale of destruction significantly exceeds the capacity of these programs, so it is necessary to expand insurance coverage. To this end, the government proposes creating a fund that would also allow for additional funding from international partners.

“Roughly speaking, one hryvnia from the state and 2-3 hryvnia from partners, so that this fund is truly large and solves the insurance problem,” the deputy says.

At the same time, the question remains where to raise the funds to fill the fund. The government proposed increasing VAT by one percentage point, but this idea has not received unanimous support.

“It would be right to first discuss such matters with parliament, which will assume political responsibility for this decision, and then submit them for public discussion,” Kisilevsky noted.