Ukraine’s economy has entered a phase where budgetary support alone is no longer sufficient. Businesses need long-term capital, war risk insurance, predictable investment rules, and effective mechanisms to stimulate small and medium-sized enterprises. According to estimates by the Ministry of Economy, Ukraine’s real GDP declined by 1.2% in January–February compared to the same period in 2025, while the banking sector recorded UAH 17.783 billion in profit during the first two months of 2026. This gap highlights a structural imbalance in incentives. It is currently more выгодно for banks to maintain high liquidity and work with government instruments than to engage in complex, long-term projects in the real sector.

The profitability of the banking system itself is not in question. A strong banking sector must be profitable, well-capitalized, and resilient. The issue lies elsewhere. Bank profits remain weakly linked to the large-scale launch of new production, technological modernization, and investment lending. This indicates that the core problem lies in incentives and risk allocation. Bank profitability, in this context, is secondary.

Describing the current situation as a general contraction in lending is no longer accurate. In 2025, net hryvnia-denominated loans to businesses and households increased by more than one-third. Even more importantly, market-based lending grew faster than loans subsidized under the “5–7–9%” program, and the share of concessional loans in the hryvnia portfolio declined. Therefore, the key deficit today concerns long-term investment resources, war risk coverage, project finance, and lending to companies lacking strong collateral or operating in sectors with longer payback cycles. According to the National Bank of Ukraine, in 2022–2023 the banking sector demonstrated resilience and even profitability, largely due to investments in domestic government bonds (OVDP). This model is understandable in wartime conditions: the state requires financing, while banks seek low-risk instruments.

This is where the key contradiction emerges. During the war, the state has naturally become the largest borrower and the dominant player in the financial system. By the end of 2025, state-owned banks still accounted for around 52% of the sector’s net assets. Under such a configuration, the government, the regulator, and state-owned banks effectively shape most of the rules of the game. For businesses, this means a narrower competitive space, slower development of private financing instruments, and greater dependence on budgetary decisions.

This is why simply scaling up the “5–7–9%” program does not appear to be an adequate response. Preferential rates are useful as an anti-crisis tool, but they do not create a полноценний capital market. When the state becomes the primary discounter of the cost of money, the market loses its risk-pricing signal. Resources tend to flow toward areas supported by budget compensation, and maximum productivity ceases to be the main criterion for capital allocation. As a result, businesses become accustomed to politically determined rates, while banks adapt to state-driven demand architecture.

Ukraine needs a different focus. State support should concentrate on risks that the private market is unwilling to assume independently during wartime. These include partial guarantees, first-loss mechanisms, war risk insurance, export insurance, and joint instruments with international financial institutions. This approach is already working within European and global programs. The European Union’s Ukraine Investment Framework provides €9.5 billion in financial instruments and aims to mobilize over €40 billion in investments. The International Finance Corporation (IFC) in 2025 signed a €100 million risk-sharing agreement with Credit Agricole Ukraine to expand business lending. The European Bank for Reconstruction and Development (EBRD) increased its financing for Ukraine to a record €2.9 billion in 2025, with 57% directed to the private sector.

The practical conclusion is clear: Ukraine needs precise risk reduction mechanisms for private capital. Further expansion of state dirigisme in lending will only entrench existing distortions. The state must create a framework in which it is выгодно for banks to finance manufacturers, exporters, processors, logistics businesses, energy projects, and technology companies. This requires predictable taxation, strong creditor rights protection, effective collateral enforcement, transparent guarantee mechanisms, and rapid solutions for war risk insurance.

A separate issue concerns the role of state-owned banks. As long as the state controls more than half of the sector’s net assets, it is premature to speak of mature competition. Wartime conditions explain this configuration, but they do not negate the strategic objective. After stabilization, the state’s share in the banking sector should gradually decrease. Otherwise, the credit system will continue to gravitate toward budget financing, crowding out market-based risk assessment.

Ukraine’s recovery will require a massive volume of private capital. According to IFC estimates, the private sector could cover up to 40% of reconstruction needs. Therefore, the key objective of financial policy is to make bank lending, direct equity investment, quasi-equity, and long-term investment instruments standard practice. A strong recovery economy emerges where the state insures extreme risks, international partners multiply private resources, and competition for borrowers functions effectively.

Ukraine will succeed when the budget ceases to be the sole major driver of financing, and private capital gains real incentives to enter the country, its industries, its emerging startups, and its innovation ecosystem. This model will ensure both resilience during the war and sustainable economic growth afterward.

Volodymyr Klymenko
Vice Chair for Regional Development and Investment & Grant Policy
ICC Ukraine
Chairman of the Banking Commission, ICC Ukraine

The following is the translation of the article by Dmytro Oleksiyenko, Chairman of the ICC Ukraine Tax Commission, published in Censor.NET. The author focuses on key aspects of the interaction between business and the state, highlighting the most acute issues that require the attention of the expert community and the authorities today.

At the end of 2025 – beginning of 2026, the International Monetary Fund was supposed to approve a new program for Ukraine in the amount of 8.1 billion USD. However, the Cabinet of Ministers’ proposals, previously agreed upon with the IMF, turned out to be so unacceptable for Ukrainian businesses and citizens that they did not find the necessary support among parliamentarians, who were asked to vote for these unpopular steps.

It should be recalled that a staff-level agreement between the IMF and the Ukrainian government was reached back in November 2025. But the Ministry of Finance, judging by the public testimony of deputies, did not conduct any systematic work with parliamentary factions to explain the content of the bills and ensure the necessary support. Instead, leading business associations and economic experts subjected the new taxes to devastating criticism.

Key proposed changes included: the introduction of VAT for Individual Entrepreneurs (FOPs) with a turnover exceeding 1 million UAH; the cancellation of the tax exemption for parcels up to 150 euros; the adoption of a law on the taxation of digital platforms; and the fixation of the 5% military levy even after the end of martial law.

Prime Minister Yuliia Svyrydenko stated on February 13 that certain compromises had been reached in the dialogue with the IMF — particularly regarding the VAT threshold for FOPs. There is also a discussion regarding moving tax changes from the status of prior conditions for program approval to the status of structural benchmarks.

Of the four key requirements of the new IMF program, the issue of VAT for individual entrepreneurs caused the greatest public outcry. The initial threshold of 1 million UAH per year was unrealistic: at this level, 670,000 FOPs would fall under mandatory VAT registration. The effective tax rate for them would have tripled — from approximately 6–7% today to 20–22%, if counting the single tax, military levy, and VAT together.

The current compromise consists of raising the threshold to 4 million UAH, which reduces the list of potential new VAT payers to approximately 260,000 entrepreneurs. The proposed figure for introducing VAT corresponds to the maximum threshold for VAT exemption for small businesses established by the EU Directive for small enterprises — 85,000 euros per year. At the current exchange rate, this is exactly about 4 million UAH.

Separately, it is worth noting: the threshold in hryvnias will devalue over time, while the real level of income will grow. To prevent the reform from turning into a mechanism for the constant expansion of the circle of VAT payers through inflation, a more rational decision would be to immediately fix the threshold directly in euros — given Ukraine’s declared course toward EU membership.

Raising the VAT threshold, however, does not solve the key problem — the administrative burden. VAT is one of the most complex taxes in terms of accounting, reporting, working with VAT invoices, and the risk of blocked accounts. For FOPs providing services, the transition to VAT means either a significant price increase for clients or a sharp decrease in profitability. For retail — an increase in retail prices. Without simultaneous simplification of the administration itself, VAT registration will turn into an additional incentive for the shadow economy.

The second block of tax reforms concerns the taxation of income received through digital platforms — taxi aggregators, marketplaces, rental, and freelance services. The government’s logic here seems more understandable: a significant volume of income in this sector exists in the shadows, while digital platforms have full information about all transactions. The digital economy in Ukraine is growing, and its taxation is justified. However, there are serious questions in the details of implementation.

First, the question of who will actually pay the new taxes. The experience of introducing VAT on electronic services of foreign companies in 2021 — the so-called “Google tax” — showed: large digital platforms do not absorb new fiscal costs but pass them on to consumers through increased prices or commissions. Streaming services, app stores, cloud platforms — everyone raised prices for Ukrainian users by exactly 20%. There is reason to expect that the new taxation for platforms will lead to an analogous result: commissions for sellers will increase, and they will raise prices for buyers. The average Ukrainian will remain the ultimate payer.

Second, the administrative burden placed on platform operators is disproportionate to the scale of their activities. A large international marketplace and a small local apartment rental service will receive the same obligations: to collect and verify the data of sellers and buyers, store it for five years, report quarterly, and in case of non-compliance — receive a fine in the amount of one hundred minimum wages. For small operators, this will be a critical burden that will jeopardize business profitability.

Third, the bill grants the State Tax Service (STS) new powers to access the banking information of accountable sellers, and the boundaries of this access are formulated quite broadly. In a country where the practice of arbitrary actions by tax authorities has long been documented by both the business community and the ombudsman, this is not a rhetorical problem.

A sensible solution would be phased implementation: first, voluntary connection to the data exchange system with tax incentives for participation, then a gradual transition to a mandatory regime. And most importantly — a parallel reform of the STS, which would make interaction with the tax authorities predictable and devoid of corruption risks.

The third issue — the cancellation of the customs exemption for parcels worth up to 150 euros — is the least justified in terms of both implementation timing and fiscal logic itself.

For example, in the EU, this discussion exists in a fundamentally different context: a single market, developed customs infrastructure, and a real competitive threat to local producers from Asian platforms. In Ukraine, a significant portion of parcels in this price range are personal use goods, gadgets, spare parts, as well as supplies for the front.

The fiscal effect of this measure will be limited and stretched over time — the administration of massive small parcels requires customs infrastructure that the State Customs Service currently does not have in sufficient volume. Instead, the social effect — the growth of retail prices — will manifest immediately and affect primarily the poorest segments of the population.

It is worth calling things by their names: the real lobbyists for this change are domestic retailers, interested in selling the same Chinese goods to Ukrainians through their own networks — and with a corresponding markup. This interest is quite understandable, but it should not be masked by fiscal arguments.

An alternative that achieves the same goal without a massive blow to the consumer exists: quantitative limits on exempt parcels per person per month or year. This approach is practiced in a number of countries and allows for separating personal consumption of such goods from commercial consumption.

The fourth block of reforms — fixing the 5% military levy rate after the conclusion of martial law — is the most strategically significant and at the same time the least publicly discussed. The current legal structure assumes that the 5% rate, introduced in December 2024, is temporary: after the cancellation of martial law, the levy automatically returns to 1.5%. The IMF insists on fixing the increased rate permanently — at least until the formal conclusion of hostilities and budget stabilization.

Arguments in favor of such an approach exist. In 2025, in the first four months alone, receipts from the military levy amounted to 163.6 billion. This is a significant source of income, and its sudden reduction, when defense spending needs remain substantial, represents a serious fiscal gap.

However, the question of the time horizon and conditions arises here. Permanently fixing the 5% rate — not as a transitional but as a base rate — contradicts the logic of post-war recovery. Private investments are sensitive to the level of taxation. A military levy rate of 5%, superimposed on the base Personal Income Tax (PIT) rate of 18%, gives an effective taxation level for personal income of 23%. This is noticeably higher than in most competitor countries for foreign direct investment in the region. After the war ends, Ukraine will compete for investors and specialists, and the level of labor taxation is one of the key factors of this competition.

A sensible construction would look different: maintain the 5% rate for a clearly defined transition period — say, 3–5 years — with an automatic reduction after reaching defined budgetary goals. This would provide guarantees of revenue in the medium term, and for investors — a predictable horizon. Instead, the indefinite fixation of the increased rate carries the risk of freezing the wartime fiscal model in peacetime.

Behind each of the four discussions — VAT for FOPs, digital platforms, parcels, military levy — the same systemic flaw is visible: Ukraine is trying to expand the tax base without simultaneously reforming the institutions that make compliance with tax obligations costly and unpredictable.

The real reason why businesses use FOPs is not that extremely favorable tax rates exist, but that the price of scaling is extremely high. This is not only increased tax rates but also the corruption risk during audits, blocked VAT invoices that have to be fought for for months, the STS’s own interpretation of norms to the detriment of the taxpayer, and the bureaucratic complication of reporting that forces even a small FOP to keep an accountant.

In the broader context of reforms required by the IMF program, it is worth asking a question that remains outside the technical discussions: is the very logic of fiscal consolidation, which shifts the main burden onto small business and the middle class, correct?

Ukraine has been carrying a security burden of continental scale for almost five years, deterring Russian armed aggression and protecting Europe. At the same time, international support comes primarily in the form of loans, not grants — even where strategic and moral logic would require a different approach. More than 300 billion USD of the aggressor state’s frozen assets remain virtually untapped as a source of reparations, despite all public declarations of the intent to use them.

Inside the country, alternative sources of fiscal mobilization remain largely unrealized. Customs smuggling of tobacco, alcohol, and fuel is a source of billions in budget losses that the customs and the STS have for years been unable or unwilling to shut down. Offshore schemes of large businesses remain. Royalty payments for the extraction of mineral resources in a number of sectors remain below international market values.

The choice to focus fiscal pressure on small businesses and employees — that is, on those who have neither lobbyists nor offshore jurisdictions — is not an economic necessity but a conscious choice by both international institutions and the Ukrainian government.

If the government truly aims to adopt a consolidated bill in the coming weeks covering all four blocks of IMF requirements, it will have to do at least three things it has avoided so far.

First — conduct real consultations with business associations, experts, and parliamentary committees before, not after, key decisions are made. Second — clearly define the conditions and terms for each norm coming into force: uncertainty for business costs more than any rate. Third — parallel to raising rates and expanding the base, present a concrete program for reforming the administration itself: simplifying VAT reporting and genuinely reforming and resetting key fiscal bodies.

Source: https://censor.net/ua/b3601977

The Ukrainian National Committee of the International Chamber of Commerce (ICC Ukraine) continues to actively integrate into global developments in international arbitration. On March 19–20, ICC Ukraine participated in the strategic meeting of Chairs of National Arbitration Commissions, which was held for the first time in Paris.

The event brought together representatives from nearly 50 countries and was chaired by the President of the ICC International Court of Arbitration, Claudia Salomon. Ukraine was represented by the Chairman of the Arbitration Commission of ICC Ukraine, Oleg Malinevskyi.

Key Development Vectors of ICC

During the meeting, the status of the International Chamber of Commerce as a global “one-stop shop” for international business needs was reaffirmed. The ICC International Court of Arbitration remains a leading arbitral institution worldwide, focusing on:

• implementing new formats (including expedited procedures);
• enhancing transparency and trust in processes;
• upgrading infrastructure (including the opening of a new hearing centre in Paris);
• preparing for the entry into force of the updated Rules on June 1, 2026.

“Significant attention was given to the role of ICC National Committees and their leadership, particularly Chairs of Arbitration Commissions, as key actors in promoting and implementing ICC policies in the field of international dispute resolution at the national level, consolidating business around ICC, and advancing new initiatives.

A particularly important point made by the President was that the ICC International Court of Arbitration is much closer to national (local) business than it may appear. Already, 127 cities worldwide have served as seats of arbitration in ICC cases — opening real prospects for Ukrainian cities to be selected as arbitration venues in the future.

As for the points I raised, in addition to calling for strengthening and enhancing the role of the ICC International Court of Arbitration as a classical arbitration institution within national systems, particularly in contracts involving the state and state-owned enterprises, I also emphasized the need to expand ICC’s role in ADR — specifically in dispute prevention (risk analysis and management) and the administration of mediation in the business sector,” noted Oleg Malinevskyi.

Participation in events of this level enables ICC Ukraine not only to bring global standards to Ukraine but also to actively contribute to shaping the future of international arbitration.

The International Chamber of Commerce (ICC) has approved a revised version of its Rules of Arbitration. The new Rules will enter into force on June 1, 2026.

These changes aim to enhance efficiency, clarity, and ease of use, while ensuring that ICC Arbitration continues to meet the needs of users worldwide. They build upon the previous update that took effect in January 2021 and reflect the ongoing evolution of arbitration practice.

The updated Rules introduce new procedures and improvements to existing provisions, focusing on streamlining proceedings and supporting effective case management. At the same time, they preserve the flexibility characteristic of ICC Arbitration, including the parties’ ability to appoint arbitrators and tailor procedures within the framework of the Rules.

Claudia Salomon, Chair of the ICC International Court of Arbitration, stated:

“The revised Rules reflect our commitment to ensuring that ICC Arbitration meets the needs of businesses, states, and state entities globally. ICC Arbitration gives parties the confidence to enter into agreements, knowing that their disputes can be resolved fairly and efficiently should they arise. These changes make the Rules clearer and arbitration more efficient, while maintaining the flexibility and procedural integrity that parties expect. Ultimately, the revised Rules provide a reliable dispute resolution process that underpins international trade and investment.”

To date, over 30,000 cases have been registered with the ICC International Court of Arbitration under the ICC Arbitration Rules. The latest revisions, carried out by the Bureau of the ICC Court and the ICC Secretariat with input from the ICC Commission on Arbitration and ADR, members of the ICC Court, and the ICC Dispute Resolution Services Governing Body, align with the commitments set out in the ICC Centenary Declaration on Preventing and Resolving Disputes and reaffirm ICC’s leading role in promoting effective, neutral, and reliable dispute resolution.

The approval of the new Rules comes amid continued active use of ICC Arbitration. In 2025, 881 cases were filed under the Rules, with the total value of pending disputes reaching 299 billion USD. The value of disputes ranged from just under 2,500 USD to 31 billion USD, reflecting the wide spectrum of cases administered by the ICC.

In a 2025 global arbitration survey, the ICC Arbitration Rules were recognized as the most popular arbitration rules worldwide among over 60 sets of rules and across all major regions.

The revised Rules will apply to all requests for arbitration submitted on or after June 1, 2026. Users are encouraged to familiarize themselves with the updated provisions before they take effect, particularly where new procedural requirements may impact case filings.

The ICC will publish the 2026 Arbitration Rules and provide additional information and practical guidance to support users and practitioners in preparing for June 1, 2026.

Source: https://iccwbo.org/

On March 19, 2026, a meeting of the ICC Global Banking Commission took place in Paris (ICC Global Banking Commission Meeting, Paris 2026). Ukraine was represented by the Chairman of the Banking Commission of ICC Ukraine, Vice Chair for Regional Development and Investment-Grant Policy of Ukraine, Volodymyr Klymenko.

Together with representatives of leading international financial institutions, specialized regulators, and members of the ICC global network, the participants of the meeting discussed current challenges in the field of trade finance, digitalization of financial services, and the transformation of the global financial architecture.

A special emphasis was placed on the development of network connections and expanding the presence of ICC Ukraine in the global banking and financial environment. The event facilitated the establishment of new contacts and the identification of promising areas for international cooperation.

Volodymyr Klymenko’s participation in this forum was an important step in strengthening the position of ICC Ukraine within the global ICC ecosystem and deepening interaction at the international level.

On March 9, 2026, the ICC Ukraine delegation made a working visit to the headquarters of the International Chamber of Commerce in Paris.

The purpose of the visit was to deepen cooperation with ICC structures and align on further steps within the framework of joint activities.

The delegation included Volodymyr Klymenko, Vice Chair of ICC Ukraine for Regional Development and Investment-Grant Policy and Chairman of the ICC Ukraine Banking Commission, as well as Dmytro Khorunzhiy, Head of the ICC Ukraine Grant and Investment Center.

On the ICC side, the meeting was hosted by Mary Kelly, Director of National Committees and Membership, Global Partnerships and Development.

During the meeting, the parties discussed the current state of cooperation between ICC Ukraine and the global ICC network, exchanged current news, and outlined a plan for joint actions for the upcoming period.

Special attention was paid to issues of grant and investment support, regional development, and the role of international partnership in the processes of Ukraine’s recovery and its European integration.

ICC Ukraine notes that such meetings are an important tool for strengthening international interaction and effectively representing the interests of Ukrainian business at the global level.

On March 12, a significant event for the future of our regions took place in Zakarpattia — the Integration Forum “Ways and Financing of Territorial Communities’ Recovery: Strategy 2026.”

On behalf of the President of the Ukrainian National Committee of the International Chamber of Commerce (ICC Ukraine), Volodymyr Shchelkunov, the forum was organized and hosted by ICC Ukraine Vice President Oleksandr Ostryanyn, together with the Institute of Communal Infrastructure LLC and the Zakarpattia Regional State Administration. Representing the Zakarpattia Regional State Administration, First Deputy Governor Vasyl Ivanco participated in the event.

https://carpathia.gov.ua/ua/news/news-532

The key message of the forum is that every community must possess maximum autonomy and be resilient to modern challenges.

Key discussion topics included:

• Practical mechanisms for attracting financing for communities, specifically investments and grant programs;

• Recovery and modernization of water supply and sewage systems;

• Implementation of the latest technologies and materials in communal infrastructure;

• Legal aspects of attracting humanitarian aid and transforming communal enterprises;

• Developing roadmaps for promising infrastructure and investment development projects.

Forum participants emphasized that attracting investments, international grants, and modern technologies is the key to the recovery and development of communities. Systematic infrastructure modernization, effective resource management, and strategic planning will allow communities to become economically strong, energy-independent, and resilient to any challenges.

Indeed, strong, self-sufficient communities are the foundation of a strong state and a successful future for Ukraine.

In the Ukrainian political vocabulary, there is a word that sounds like an incantation — “harmonization.” It is repeated by officials, experts, investors, and donors. They mean the convergence of Ukrainian rules with European ones. For an investor, this is much simpler. They need to understand that the rules in Ukraine work as predictably as they do in EU countries.

When rules are clear, money becomes cheaper and “longer.” Banks lend more actively, competition arises between financial institutions, and companies gain more financing options. For business, this is not abstract politics, but concrete economics.

An investor checks the first thing very pragmatically: what happens when a bank falls into crisis. After the 2008 financial crisis, Europe formed a simple rule. If a bank fails, the losses are first borne by its owners and major creditors. The state does not rescue the bank with taxpayers’ money. For an investor, this is a signal that the system operates according to a clear logic even in a stressful situation.

The next question is trust in bank deposits. People usually only look at the amount guaranteed by the state. For the stability of the system, other things are important: how quickly the money is paid out, whether the mechanism works automatically, and exactly who it protects. If depositors trust the banks, they keep their money there. For banks, this is a stable resource, and for business, it means more loans.

Another topic that previously seemed technical is the cybersecurity of the financial system. Modern banks operate through digital platforms; therefore, Europe has introduced uniform requirements for system protection, security testing, and the oversight of IT contractors. This is not a matter of technology for the sake of technology. It is a matter of trust in the financial infrastructure.

The same applies to the payment system. Ukraine has already taken an important step in its modernization, but European rules are constantly being updated. This concerns the fight against fraud, transparent commissions, and clear responsibility for financial institutions. For business, this means fewer losses and clear rules of the game in the payment market.

A separate story is the capital market. In Ukraine, it is often believed that if a law is passed, the market has already been created. In reality, an investor looks at much simpler things. Whether securities can be easily bought and sold. Whether there is transparent corporate reporting. Whether supervision works and whether manipulation is punished. And most importantly — whether any corporate dispute turns into a multi-year judicial soap opera.

The most painful topic for an investor is the rights of minority shareholders. Investments rarely come in large packages all at once. Often, it is a gradual process: a small stake, then an increase. If there is a risk of share dilution, asset stripping, or protracted corporate conflicts, the investor simply factors this risk into the price or refuses the deal altogether.

War creates an obvious risk for any investment. But alongside it exists another — legal risk. And it is precisely this risk that can be reduced even during the war. When rules are followed consistently, investors are ready to work even under difficult conditions.

International loans help keep the economy afloat. But a loan is a debt that must be repaid. Investments work differently. This is money that enters companies and remains in the country for years if the rules of the game are stable.

That is why true harmonization is not about the appearance of new “correct” terms in legislation. It begins where the rules are implemented without exceptions. For an investor, this is the main signal that the country is ready for “long money.”

The author — Volodymyr Klymenko, Vice Chair for Regional Development and Investment-Grant Policy of Ukraine

A working online meeting took place between Oleksii Kozhanov, Secretary General of ICC Ukraine, and Christine Lim, Global Head of the ICC Academy.

During the discussion, the parties explored potential areas of cooperation between ICC Ukraine and the ICC Academy, and outlined prospects for implementing joint educational and professional projects.

Special attention was given to the development of training programs, expanding access for Ukrainian professionals to international certification courses, and opportunities to integrate ICC’s global educational initiatives into the Ukrainian business environment.

The meeting was held in a constructive format and laid the foundation for further active cooperation and the launch of new joint initiatives.