Zelensky announces ‘economic patriotism’ program, meets with top 50 businesses

Companies in Ukraine are about to receive temporary tax and legal relief amid growing threats of a full-scale war with Russia.

On Feb. 22, Ukrainian President Volodymyr Zelensky announced a program on “economic patriotism,” which will ease the tax burden, including possibly reducing value-added tax from current 20% to 8% on petrol and diesel, and fewer inspections.

“Business should protect our economy, finances, and create jobs. We need to be strengthening the country together, each on its own front,” he said.

According to Yaroslav Zheleznyak of the 20-member Voice party, the government plans to generate funds for the program by raising rent payments for gas producers.

This will happen after the parliament passes in the second reading the bill No. 7038. The announced program was submitted in the form of amendments to the bill.

Although there are still no clear details on the program, with the help of such incentives the government plans to gain economic independence, “especially in the energy sector,” said Zelensky.

However, some experts doubt the VAT reduction on diesel and gasoline will be an effective tool since Ukraine imports 80% of all fuel mostly from Russia and Belarus.

According to Oleg Nivievskyi, an assistant professor at Kyiv School of Economics, lower fuel prices will only raise demand and “worsen (energy) dependence.”

Plus, only car owners, especially owners of expensive cars that burn a lot of fuel, will benefit from such steps,  Nivievskyi believes. The economist also noted that fuel prices usually fall less that the tax will be reduced.

For instance, in the EU, the price is usually reduced by only a third of how much the tax has been reduced.

“It’s better to reduce the VAT rate in all sectors of the economy, rather than for specific products,” said Nivievskyi.

At the same time, the expert was sure that fewer inspections and lower tax burden for businesses may have a positive economic impact.

Truce with oligarchs

On Feb. 23, owners of Ukraine’s top 50 businesses, including oligarchs Rinat Akhmetov and Victor Pinchuk, met at the President’s Office.

Citing an unnamed participant, who was invited to the meeting, Ukrainska Pravda reported that he said that “business is ready to help the country in this difficult time and let go of grudges.”

Ukraine’s richest man Akhmetov, whose fortune reached $11.7 billion last year, announced that his holding SCM will pay $34 million (Hr 1 billion) in taxes in advance to support the country.

“More than ever, Ukraine needs stability of the state finances,” he said, SCM reported.

SCM’s assets include a metallurgical plant in Mariupol, a Ukrainian-controlled industrial city in Donetsk Oblast. The city is one of the closest to the Russian-occupied territories.

Zelensky asked top business people to stay in Ukraine while he “does his best for peace.”

Among other speakers at the meeting were the chief of general staff, head of that nation's defense intelligence agency, and defense minister. Prime Minister Denys Shmygal was also present, but did not speak.

“It was productive. Business owners are ready to lend a hand,” said Serhiy Nikiforov, the spokesperson for the president, Interfax reported.

Andriy Stavnitser, co-owner of TIS Group, Ukraine’s largest private sea port, said that he was satisfied with the meeting.

"I think that after the meeting each one of us are feeling more confident," Stavnitser said.