There are plans to allow Ukrainians to invest tax-free via special accounts
Draft law No. 15314 has been registered on the Verkhovna Rada’s official website.
Draft law No. 15314 on support for national investors has been registered with the Verkhovna Rada. It proposes the introduction of personal investment accounts for individuals who are residents of Ukraine.
According to Danylo Getmantsev, this is a special instrument that will allow citizens to invest in securities and other financial instruments through investment firms in accordance with specific rules.
At present, this is merely a legislative initiative. For the new rules to come into effect, the bill must be considered by the Verkhovna Rada and signed into law following its adoption.
What is a personal investment account?
It is proposed that a personal investment account be established as a special account for investments by individuals. Through it, citizens will be able to invest in securities and other financial instruments via investment firms.
According to the NSSMC, each citizen is permitted to hold only one active personal investment account. At the same time, there is to be no limit on the number of securities trading transactions carried out via such an account.
The draft law also sets out rules for maintaining such an account, switching between investment firms and early closure.
What tax incentives are on offer
The key idea of the draft law is a special tax regime for investment income.
It is proposed that income received through personal investment accounts be exempt from taxation. This applies, in particular, to income from securities transactions, dividends and interest.
However, the exemption will not apply in cases of early withdrawal of funds. According to Getmantsev, one such restriction is the withdrawal of funds before the end of 1,095 calendar days.
What safeguards are in place
The draft law provides for a number of restrictions designed to prevent abuse.
In particular, an individual will be allowed to hold only one personal investment account. Exceptions may apply in technical situations involving a switch from one investment firm to another.
The conditions for maintaining an account, early closure and the transfer of assets between investment firms must also be specified.
Why is this needed
The authors of the initiative explain that personal investment accounts are intended to encourage citizens to invest in the Ukrainian capital market.
Such a mechanism could serve as an alternative to keeping money solely in current or deposit accounts and create an additional source of long-term capital for the economy.
Previously, the NSSMC explained that the idea behind such accounts is to channel private savings into investment and support the country’s reconstruction.
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