Ukraine 2017 budget revenue reaches plan, rising 32% yoy

Ukraine’s 2017 state budget revenue rose 32% yoy to UAH
793.6 bln, which was almost in line with the plan, exceeding it by UAH 221.6
mln, the State Treasury reported on Jan. 3. In particular, tax revenue grew 23%
yoy to UAH 448.9 bln while customs revenue swelled 30.8% yoy to UAH 303.3 bln.

VAT reimbursement increased 32% yoy to UAH 120.1 bln,
while revenue generated from social payments (personal income tax and Pension
Fund contributions paid by employers) jumped 58% yoy to UAH 19.8 bln.

Evgeniya Akhtyrko: The
goverment was able to reach its revenue target owing to higher economic
activity, better payment discipline of businesses and improved tax collection,
particularly customs. Higher inflation also played a role.

The fact that the amount of collected budget revenue reached its target implies that tax collection authorities
continue working in the so-called “manual regime,” in which the amount of taxes
paid by certain business is based not on its performance but on the subjective
view of tax authorities on how much taxes need to be paid. This indicates that
Western reforms still have a long way to go.

The 2018 state budget envisages UAH 913.6 bln in
revenue, which would be 15% higher yoy. The slower pace of projected growth
implies many one-off payments in 2017. In particular, the minimum wage should
increase only 16% after doubling in 2017. The budget is planned for 3% annual
GDP growth, which does not entail much potential for boosted tax revenue from
business activity.