---
title: "Parliament supports retention of local tax revenues for the 2027 budget"
description: "Ukraine's Parliament supported retaining 64% of PIT and reverse subsidies in local budgets for 2027. The Association of Ukrainian Cities warns of artificial bankruptcy risks due to outdated calculation mechanisms."
date: 2026-11-12T17:02:49.019Z
lang: en
url: https://xab.info/en/posts/parliament-supports-local-budget-revenues-2027
tags: [ukraine, budget-2027, local-government, economy, taxes, rever-subsidy]
author: "Alexander Buran"
publisher: "XAB.info"
---

# Parliament supports retention of local tax revenues for the 2027 budget

![Ukrainian 500 hryvnia banknotes lying on a table](https://xab.info/media/2026/11/12/parlament-podderzhal-sohranenie-dohodov-gromad-2027/parlament-podderzhal-sohranenie-dohodov-gromad-2027-1.webp)

## Key Points

- Parliament supports retaining 64% PIT and reverse subsidies
- 2027 reverse subsidy calculations are based on outdated 2026 data
- Destruction of businesses poses an artificial bankruptcy risk
- AUC emphasizes financial autonomy for economic resilience

During the review of the 2027 State Budget project, the Ukrainian Parliament voted to retain 64% of Personal Income Tax (PIT) and reverse subsidy funds within local budgets. The initiative, promoted by the Association of Ukrainian Cities (AUC), received significant support from lawmakers, with 278 and 284 votes cast in favor of the relevant amendments. Municipalities consider this decision a critical condition for maintaining financial stability amid the ongoing war.

### Risks of artificial bankruptcy

Oksana Prodan, advisor to the head of the Association of Ukrainian Cities, stated that the current mechanism for calculating reverse subsidies no longer reflects wartime realities. The reverse subsidy involves withdrawing funds from budgets of municipalities that possess sufficient tax capacity and do not require basic subsidies. However, the 2027 calculations are based on 2026 economic indicators, failing to account for the widespread destruction of large enterprises that previously provided significant tax revenues.

### Irrelevance of old economic models

The core issue is that the withdrawal formula does not reflect actual business losses. Many enterprises that were functioning or profitable last year have since been destroyed or ceased operations. As a result, communities face a situation where the state plans to withdraw funds that local budgets objectively cannot generate. Oksana Prodan emphasized that such actions could push financially viable communities to the brink of bankruptcy.

### Economic resilience and recovery

Retaining reverse subsidy funds at the disposal of local authorities is a matter of survival for municipalities that maintain economic activity in their territories. The ability of communities to attract investment and create jobs depends directly on their ability to manage their own resources. AUC representatives expressed hope that the Ministry of Finance will take into account the parliamentarians' position, which aims to prevent the failure of obligations at the local level.

### Significance for the future

The parliament's decision to support the AUC amendments signals an understanding of the scale of the budget crisis. Currently, the issue of retaining funds in communities has moved beyond a local problem and become a factor of national economic stability. The final fate of these initiatives during the final approval of the 2027 budget will serve as an indicator of the state's ability to balance fiscal policy with regional needs during the recovery period.

## Fact-Check & Sources

- [Доведут до искусственного банкротства: у громад забирают средства, которые они уже не зарабатывают](https://www.rbc.ua/ukr/news/dovedut-shtuchnogo-bankrutstva-gromad-zabirayut-1794495801.html) - Data on parliamentary support for AUC amendments confirmed by the source.

## FAQ

### Why does the Association of Ukrainian Cities oppose the current reverse subsidy calculation system?

The system is based on the previous year's performance, ignoring the destruction of enterprises that no longer generate taxes, leaving communities at risk of failing their obligations.

### How many votes were cast for keeping funds in local budgets?

Lawmakers supported the amendments with 278 and 284 votes respectively.