On 23 December 2023, the State Tax Service of Ukraine released Newsletter No. 6/2023, which provides clarification on the implementation of the windfall tax on banks per Law 3474-IX. This legislation introduced a tax rate of 50% on bank profits for the 2023 tax year. Starting 1 January 2024, the law also introduces an increased corporate tax rate of 25% for banks.
Some of the main points include:
- The 50% tax rate will be in effect for 2023. Adjustments will be made for advance payments at the rate of 18%;
- For bank dividend distributions, the 50% tax rate will be applied in 2023. However, the rate will be 25% for dividend distributions from 2024;
- In 2023, offsetting the financial result before tax with losses carried forward from previous years is not permissible. This provision will allow incurred losses to be included from 2024, including losses incurred in 2023;
- Controlled foreign company (CFC) profits for banks are subject to the 50% tax rate in 2023 and 25% from 2024.
