The need to develop a National Revenue Strategy (NRS), which is discussed in the program of cooperation with the International Monetary Fund, is due to Ukraine’s high current dependence on foreign aid and the need to reduce it in the future, Finance Minister Serhiy Marchenko said
“Why do we need a National Revenue Strategy at all? Because we are now 50% dependent on foreign aid. Ukraine cannot live like this, it cannot! … The National Revenue Strategy aims to create conditions for a revenue base inside the country to reduce external dependence,” he said in an interview with Interfax-Ukraine.
The minister added that another most important task of the strategy is to establish fairness in terms of taxation. “Those who have income should pay taxes and without all kinds of ways of preferential treatment,” Marchenko explained.
He specified that according to the agreements with the IMF a corresponding action plan should be prepared in May and the strategy itself should be adopted by the end of the year.
“I see no problem with the documents, which should be prepared by the Ministry of Finance and the National Bank – we are quite competent here and are ready to move quickly,” said the head of the Ministry of Finance.
As reported, the four-year EFF program with the IMF stipulates that in the second phase, which tentatively begins in 2025, fiscal policy will focus on critical structural reforms to guarantee medium-term revenues through the implementation of the NDS along with improved public financial management and the introduction of public investment management reforms to support post-war recovery.
The strategy, as stated in the Memorandum with the IMF, will define the key principles and objectives of tax policy and administration for both the short-term and post-war recovery, and outline the steps to be taken to prepare and implement the NSDS.
The Cabinet of Ministers of Ukraine adopted a decision on March 24 instructing the Ministry of Finance to begin preparing the NSD for 2024-2030. By the end of May, an action plan must be developed, including to address key issues identified through the taxpayer survey, which will be an input into the NSD roadmap. This requirement is one of the program’s 19 structural beacons.
A gap analysis, supported by IMF technical assistance, will then be carried out to use this information in a roadmap for the NDS (2024-2030), with clear revenue and other policy targets, and guidelines for coordination between government agencies, donors, the private sector and civil society, led by the Ministry of Finance. This should be completed by the end of July 2023, and the final strategy will be adopted by the end of 2023, another structural beacon.
According to Rostislav Shurma, deputy head of the Office of the President, the NSD will primarily be driven by the concept of a tax model. “This is a concept that we have proposed and will discuss in some modified form with both the government and the IMF,” he said on March 23 on the sidelines of the Ukrainian Tax Reform and Anti-Corruption Summit.
