Banking secrecy under threat: are Ukrainians ready to open accounts for the tax authorities?
16 April 20:50
The State Tax Service of Ukraine (STS) is seeking to change the rules of the game: its goal is to gain direct access to citizens’ bank accounts. According to "Komersant Ukrainian", citing an article by hromadske, this step is justified by the desire to fight the shadow economy, improve tax discipline and compensate for the reduction in international aid. But how justified is this, and what are the risks to taxpayers if the initiative is implemented?
How the tax logic works
Imagine a simple situation: you went to a restaurant with a friend, the friend paid the bill – UAH 1000, and the next day you returned half of it – UAH 500 to your card. For the tax authorities, this transaction looks like your friend’s income, from which you have to pay 18% personal income tax and 1.5% military duty. To prove the opposite, for example, that it is a debt repayment, you need to provide a loan agreement with details. A similar logic applies to any “pluses” on the account if the funds did not come from immediate family members or are not pensions, alimony, or state aid.
Revenue strategy and external pressure
The idea of giving the State Tax Service direct access to bank accounts is embedded in the National Revenue Strategy until 2030. This document was approved in December 2023 and became part of the fulfillment of IMF requirements. The Ukrainian government justifies the innovation by the need for fiscal transparency, especially in times of war and growing public debt.
However, experts emphasize that the IMF itself did not insist on this form of implementation.
“The Fund demanded a program, but its content could have been different,” said economist Dmytro Boyarchuk of Case Ukraine.
Potential consequences: transparency or pressure?
Although the State Tax Service can currently access banking information only through the courts or through targeted requests, full access to accounts could change everything. According to Bohdan Slutsky of the Center for Economic Strategy, this will allow the State Tax Service to see the overall cash flow, interaction with counterparties and identify systemic risks.
However, other experts warn that such a step could turn into a mechanism of pressure on businesses and citizens. According to Ilya Neskhodovskyi of ANTS, instead of a real improvement in tax administration, we may get an increase in corruption risks and a loss of trust in the tax authorities.
Implementation and reforms
Today, the State Tax Service already has access to information on the income of Ukrainians abroad as part of an international exchange. This, for example, helped to identify tax evasion among models from the OnlyFans platform.
The tax authorities have also begun to monitor individuals who systematically sell goods online but do not register their business activities. Although these are mostly large amounts or regular transfers, the trend itself indicates an intention to tighten control.
Trust is the main problem
A World Bank study found that only 7.8% of Ukrainians believe that tax authorities are fair, while almost half of respondents believe the opposite. In such circumstances, expanding the powers of the State Tax Service can only exacerbate tensions between taxpayers and the state.
The banking community is also skeptical. Serhiy Mamedov, vice president of the Association of Ukrainian Banks, compares the loss of banking secrecy to a crack in the foundation – insignificant at first, but with great risks in the future. Indeed, following the example of Luxembourg, where only wealthy clients remained in banks after a similar reform, Ukrainian banks risk losing their mass customers.
Prospects and European experience
The Ministry of Finance assures that access to accounts is necessary for the introduction of progressive taxation: lower incomes mean lower rates, higher incomes mean higher rates. But in practice, European countries still strike a balance between control and the rights of citizens. For example, in France or Germany, tax authorities have access to accounts, but it is strictly regulated.
According to experts, Ukraine should also look for its own compromise so that the reform does not turn into a flight of money into cryptocurrencies or cash. The number of officials declaring cryptocurrencies is already growing, and many individual entrepreneurs – especially men – are closing their businesses to “disappear from the radar.”
What Ukrainian lawmakers say
Oleksiy Honcharenko, a member of the European Solidarity party, says that there will be no access to citizens’ bank accounts this year.
“In order to make such a decision, it is necessary to vote for it in the Verkhovna Rada. The Rada will not support such a decision,” Honcharenko wrote on his Telegram channel.
In his turn, the head of the Verkhovna Rada’s Finance Committee, Danylo Hetmantsev saidthat there is no such bill in the committee.
“And no, there is no chance of adopting this decision before the end of this convocation,” Hetmantsev said.
The tax authorities’ access to bank accounts is not only a matter of fiscal control, but also a test of trust between the state and society. In the current situation, when citizens are not confident in the protection of their rights, a hasty implementation of such a reform could result in a deep crisis of trust.
