The government plans to increase VAT to provide business compensation
The Ministry of Economy is developing a mechanism to compensate enterprises for war damages ranging from 5 to 10 million dollars. An increase in the standard VAT rate by one percentage point could serve as one of the financing sources. This was reported by Delo.ua citing Єгор Перелигін, according to the portal PromPolitInform.
Classic war risk insurance faces the limited capital of Ukrainian insurers and the high cost of international reinsurance. According to experts, the scale of destruction significantly exceeds the financial capabilities of the market. The register of private business damages contains hundreds of recorded facilities with million-dollar losses.
Compensation Range and Coverage
The Ministry of Economy is considering covering losses within the range of five to ten million dollars. Fixed assets, including buildings, equipment, and production facilities, should become the main objects of protection. Inventories in warehouses are not planned to be compensated, with the exception of fuel.
It is expected that the state will reimburse the initial portion of losses, while companies will cover the rest independently or through commercial insurance. The Export Credit Agency is intended to become the system administrator. This approach should simplify the search for additional financing on the market.
Entrepreneurs’ Stance on the Initiative
Oleksandr Sokolovskyi, founder of the Textile-Contact group of companies, supports the tax increase to replenish the support fund. He notes that in addition to financing, the relocation of teams and the restoration of logistics remain serious problems. Kateryna Zahoriy, a representative of the Darnitsa pharmaceutical company, emphasizes the importance of targeted fund usage and transparency.
“We support this model provided that funds are used for their intended purpose, the fund operates transparently, and payouts are fast,” Zahoriy said. At the same time, UBC Group President Ihor Humennyi opposes such a decision because it places an additional burden on business and consumers.
Arguments in Favor of the Tax
The state budget draft for 2027 provides resources for business insurance amounting to 58.7 billion hryvnias. One additional percentage point of VAT can generate about one billion dollars annually. Proponents of this model highlight the broad tax base and the speed of launching the mechanism.
Alternative proposals include issuing government bonds and differentiated contributions depending on the risk level. However, experts warn that tax exemptions could create risks for cooperation with the International Monetary Fund. The final decision will depend on further legislative initiatives and discussions within the business community.
Photo: Delo.ua
