Prime Minister Serhiy Koretsky has officially clarified the key reasons that prompted the government to take the unpopular step of adjusting tax policy. The draft state budget of Ukraine for 2027 includes an increase in value-added tax (VAT), which is directly linked to the creation of a large-scale financial cushion to protect entrepreneurship.
Financing the War Risks Program
According to the head of the Cabinet, the main driver for these changes was the urgent need to find stable sources of funding for the business war risk insurance program. The state aims to create a working mechanism that will allow enterprises to quickly receive compensation for material damage caused by Russian attacks and infrastructure shelling.
Special Fund Parameters and Cabinet's Position
To launch the full functionality of this mechanism, the government intends to allocate about one billion dollars or even a slightly larger amount from budgets at various levels. These resources are planned to be accumulated in a special account and fixed in a separate budget item. As Koretsky noted, there are currently no alternative internal or external sources to cover such large-scale expenditures.
Dialogue with Business and Parliament
The initiative proposed by the government implies an increase in the VAT rate by exactly 1% (to 21%), which has already sparked active discussions in the expert community. The Prime Minister stressed that the executive branch continues to maintain an open dialogue with both the parliament and business associations, trying to find a balance between the need to fill the treasury and maintain economic activity in the country.
