Budget revenue rises 12% yoy in 2M19, below plan

Ukraine’s 2M19 state budget revenue rose 12.0% yoy to
UAH 125 bln, which is 1.0% below plan, the State Treasury provisionally
reported on March 1. Net tax revenue inched up 0.2% yoy to UAH 97.0 bln (11.1%
below plan). Customs revenue declined 3.2% yoy to UAH 48.1 bln (9.4% below
plan). Meanwhile, the budget’s special fund revenue nearly doubled to UAH 23.9
bln, outperforming plan by 75.3%.

In February alone, Ukraine’s state budget revenue
surged 24.8% yoy to UAH 70.2 bln, which is 8.3% yoy above plan. The unusual
rise was mostly due to the budget’s special fund revenue from the customs
amnesty of vehicles acquired in 2014-2018 but registered in EU states (to avoid
Ukrainian fees). In particular, special fund revenue swelled 234.5% yoy to UAH
13.6 bln, which is almost double above plan.

Net tax revenue in February increased 17.7% yoy to UAH
42.1 bln. In particular, net VAT receipts jumped 19.9% yoy (1.9% above plan).
VAT reimbursement grew 13.1% yoy. Meanwhile, customs revenue increased 4.1%
yoy, which is 7.2% below plan.

Local fiscal revenue in 2M19 improved 22.1% yoy to UAH
41.9 bln, underperforming plan by 1.7%. Social payments (pension and other
social fund contributions paid by employers) advanced 23.9% yoy to UAH 40.0
bln.

The State Treasury also published information on
revenues from the customs amnesty of vehicles with EU license plates, which
extended from Nov. 25 to Feb. 24. In December-February, total revenue reached
UAH 7.6 bln. Of this amount, the receipts from excise tax totaled UAH 4.3 bln,
while VAT tax receipts amounted to UAH 2.6 bln.

Evgeniya Akhtyrko: The budget
revenue surge from the customs vehicle amnesty will vanish as the grace period
when owners could pay the discounted 50% of excise tax ended on Feb. 24. These
revenues won’t be used as a reserve for future budget payments as the
government already decided to use these receipts for one-time payments for pensioners
receiving the lowest state pensions ahead of the elections.

Net VAT receipts surged in February even amid
significant growth of VAT reimbursement to exporters. At the same time, customs
collections remained weak among the generators of state revenue despite the
amnesty gains because they were categorized separately (as part of the special
fund).