Business urges the Verkhovna Rada to reject draft law No. 14097 on increasing taxation of banks’ income

24/ 10/ 2025

The banking community, represented by the European Business Association, the Independent Association of Banks of Ukraine, and the Forum for Leading International Financial Institutions, has appealed to Ruslan Stefanchuk, Speaker of the Verkhovna Rada of Ukraine, and Members of Parliament to reject draft law No. 14097 “On Amendments to the Tax Code of Ukraine regarding the specifics of corporate income taxation of banks in 2026”. The draft law proposes a temporary increase in the corporate income tax rate for banks to 50%, while prohibiting the use of loss carryforwards. This could result in several negative consequences for the banking sector and the Ukrainian economy as a whole, including: A higher tax burden would hinder the formation of capital buffers needed to meet EU integration requirements and strengthen banks’ resilience. Profit earned this year and next is the key source of such capital. An increased risk of capital shortages, which may restrict lending to businesses and individuals and jeopardise economic recovery. According to the National Bank of Ukraine, 9 banks, including 2 state-owned banks, are required to undergo recapitalisation measures. Eight of these banks would likely be unable to fulfil their recapitalisation programmes should draft law No. 14097 be adopted. The proposals violate the principles of tax legislation stability, as defined by the Constitutional Court of Ukraine. According to this principle, changes to the corporate income tax rate for banks adopted after 1 July 2025 cannot be applied earlier than the 2027 budget year. If approved, this would mark the third consecutive year in which banks’ profits are taxed at more than double the rate (50%) compared to other industries (18%). The total corporate income tax paid by banks to the budget for 2023 and 2024 exceeds UAH 170 billion. Such an excessive tax rate is not only unjustified but also unconstitutional, as it violates Article 42 of the Constitution of Ukraine: “The State shall ensure the protection of competition in business activities”. Businesses also stress that adopting the draft law would negatively affect Ukraine’s investment attractiveness, especially in light of the planned privatisation of state-owned banks JSC Sense Bank and Ukrgasbank. Constant changes to tax rules undermine investor confidence and create ongoing uncertainty for businesses. The banking community urges MPs to prevent further escalation of these risks and to ensure predictability in tax policy. The European Business Association recognises the importance of ensuring stable budget revenues and adequate funding for national defence. However, the proposed changes may have adverse effects on financial stability, bank capitalisation, and the recovery of economic lending. Therefore, the business community calls on Parliament to reject draft law No. 14097 and to initiate an open dialogue to find balanced solutions for budget funding that do not harm the banking sector or the national economy.

The draft law proposes a temporary increase in the corporate income tax rate for banks to 50%, while prohibiting the use of loss carryforwards. This could result in several negative consequences for the banking sector and the Ukrainian economy as a whole, including:

A higher tax burden would hinder the formation of capital buffers needed to meet EU integration requirements and strengthen banks’ resilience. Profit earned this year and next is the key source of such capital.
An increased risk of capital shortages, which may restrict lending to businesses and individuals and jeopardise economic recovery.
According to the National Bank of Ukraine, 9 banks, including 2 state-owned banks, are required to undergo recapitalisation measures. Eight of these banks would likely be unable to fulfil their recapitalisation programmes should draft law No. 14097 be adopted.
The proposals violate the principles of tax legislation stability, as defined by the Constitutional Court of Ukraine. According to this principle, changes to the corporate income tax rate for banks adopted after 1 July 2025 cannot be applied earlier than the 2027 budget year.

If approved, this would mark the third consecutive year in which banks’ profits are taxed at more than double the rate (50%) compared to other industries (18%). The total corporate income tax paid by banks to the budget for 2023 and 2024 exceeds UAH 170 billion. Such an excessive tax rate is not only unjustified but also unconstitutional, as it violates Article 42 of the Constitution of Ukraine: “The State shall ensure the protection of competition in business activities”.

Businesses also stress that adopting the draft law would negatively affect Ukraine’s investment attractiveness, especially in light of the planned privatisation of state-owned banks JSC Sense Bank and Ukrgasbank. Constant changes to tax rules undermine investor confidence and create ongoing uncertainty for businesses. The banking community urges MPs to prevent further escalation of these risks and to ensure predictability in tax policy.

The European Business Association recognises the importance of ensuring stable budget revenues and adequate funding for national defence. However, the proposed changes may have adverse effects on financial stability, bank capitalisation, and the recovery of economic lending. Therefore, the business community calls on Parliament to reject draft law No. 14097 and to initiate an open dialogue to find balanced solutions for budget funding that do not harm the banking sector or the national economy.