UKRAINE luxury market gets another blow, this time from the Government

The Ukrainian Ministry of Finance has announced that it is to increase the scope of its luxury tax as part of a number of measures to expand revenue streams in the 2010 budget. The Ministry said in a statement on March 30 that, as part of fiscal policy discussions with the International Monetary Fund (IMF), it has agreed to various measures to buoy revenues during the downturn.

The Ministry said that this would include a tax on luxury items, which would be achieved through “an increase in excise duties on cognac, cigars and prestigious car brands”.New levies for the “special use of water resources" and for the mining sector were also discussed, according to the Ministry. Further details have yet to be released.

Oliver Petcu, CPP: ”the most affected luxury industry sector will be the auto one, which has already suffered sales drops of up to 70%. Leasing companies and indirect suppliers will also be deeply affected. As for the additional tax on spirits, this will only increase the black market sales. Other sectors will most likely be targeted will be fragrances, furs and furniture”