Budget 2027 clears first stage, banks to keep 50% tax: what the Rada decided

Two decisions in one day

On 27 October, Ukraine’s parliament took two decisions of major importance for public finances. First, MPs adopted as a basis the proposals and conclusions on the draft State Budget for 2027 — the first stage of passing the country’s main financial document. A record 5,236 amendments were submitted to the draft. Second, they backed at first reading bill No. 15262, which extends the higher profit tax on banks for another year.

Banks: 50% again

Bill No. 15262 was supported by 265 MPs. It provides for a 50% corporate profit tax rate for banks in 2027, while also prohibiting banks from reducing their taxable financial result by losses from previous periods. The parliamentary finance committee had recommended adopting it at once as a basis and as a whole, but for now it has passed only the first reading.

Danylo Hetmantsev, who chairs the committee on finance, tax and customs policy, noted that if the law is finally adopted, it will be the fourth time parliament has supported a higher rate for banks. He estimates it will bring an additional 38 billion hryvnias to the budget in 2027 alone.

The “excess profits” argument

Hetmantsev justifies the move by saying the banking system earns excess profits even in wartime. “Banks have accumulated huge liquidity that they do not use for normal activities. When we meet businesses, their first and main demand is cheap money. But there is no cheap money in the country, even though there are free funds in the banking system. Instead, banks earn on operations with government securities rather than lending to the economy,” he said.

That, according to the MP, is why part of the banks’ excess profits should go to the needs of the army. For banks, this means the tax burden in 2027 will remain at wartime levels; for the budget, it is a guaranteed source of revenue amid enormous defence spending.

The budget: what the opposition dislikes

The conclusions on the 2027 budget drew criticism. Nina Yuzhanina, an MP from European Solidarity, said that among the amendments taken into account “there is not a single one with real substance”, while several dozen more were sent back to the government for further work. Her faction, she said, proposed cutting spending by 515 billion hryvnias and redirecting the money to the Armed Forces, in particular to index military pay.

Among the most controversial items, Yuzhanina named the revival of the road fund, which is to receive 25% of special fund revenue, mostly from fuel excise duties, as well as pay rises for judges. “A soldier in the trench cannot even get his pay indexed to inflation, while a judge will get a 50% higher salary next year,” she said. She also raised concerns about the text of the bill, including the use of surplus funds of the unemployment insurance fund.

At the same time, as Ukrinform reported, the budget committee supported an amendment to raise military salaries.

What comes next

The government now has to revise the draft budget in line with the conclusions, after which parliament will consider it at second reading. Under the Budget Code, the state budget must be adopted no later than 1 December. The bank tax bill also needs to pass a second reading and be signed by the president.