Kim says frontline communities will not be subject to 4% income tax

Liliia Pashynna, Head of the Congress of Local and Regional Authorities under the President of Ukraine, and Vitalii Kim, Head of the Mykolaiv Regional State Administration: NikVesti

The government will not reduce the share of personal income tax for frontline communities from 64% to 60%.

This was stated by Vitalii Kim at a briefing after a meeting of the Congress of Local and Regional Authorities under the President of Ukraine on 7 October, NikVesti reports.

Earlier, the government proposed to reduce the share of personal income tax that goes to local budgets to 60%. If the changes were adopted, local communities across the country could lose 15.9 billion hryvnias, which would threaten the funding of schools, kindergartens, hospitals, housing and communal services, and public sector salaries.

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Answering a journalist's question about preferences for the frontline Mykolaiv region, Vitalii Kim said that it is planned to leave 64% of personal income tax for such communities as a matter of priority. He answered the journalist's question whether this decision had already been made:

«We are leaving 64% of personal income tax for the frontline communities. The final decision has not yet been made, but it is planned,» said Vitalii Kim.

The government also plans to support frontline businesses through a new funding mechanism: 80% of compensation for destroyed property will be covered by the state, and loans for entrepreneurs will be available on favourable terms.

«This also means an increase in the loan amount for frontline regions, an increase in loan disbursement. Previously, we had a risk class of 9 or 10, loans were more expensive and we were not given them. Businesses on the frontline, which were supposed to be helped, were given expensive loans, for example, Agrofusion at 12% euros, which is a very high interest rate compared to the average of 7%. Now the situation has been levelled out,» explained Vitalii Kim.

According to him, the issue of additional preferences will be considered in October to make it more profitable for businesses to open and recover in the frontline areas.

«We are now seeking additional conditions to make it more profitable for businesses to open in the frontline areas. Business is about money, and money is about risks. If the risk is higher, the earnings should be higher,» he added.

The government proposes to reduce the share of personal income tax that goes to local budgets from 64% to 60%. If the changes are adopted in the 2026 budget, communities across the country may lose 15.9 billion hryvnias.

See also the article NikVesti: «Special economic zone for Mykolaiv: a chance to stop business outflow or a risk for the budget»