The IMF has agreed not to oppose Ukraine's proposal to raise the corporate profit tax on banks to 50%, marking the third time the lender has accepted the measure despite concerns over its potential impact on lending and economic growth, reported Ukraine Business News.

The decision followed discussions between Ukrainian authorities and an IMF mission that concluded in Kyiv on June 3, according to officials familiar with the talks.

Ukraine is seeking to maintain elevated taxation of the banking sector as it continues to finance wartime spending and address budget pressures caused by Russia's invasion. The proposed 50% tax rate would represent a doubling of the standard 25% corporate profit tax currently applied to banks.

The measure has precedent. A 50% tax rate was already imposed on Ukrainian banks in 2023 and 2024, generating more than UAH170bn ($3.8bn) in budget revenues over the two-year period. By comparison, banks paid just UAH7.3bn ($165mn) in profit taxes in 2022, when the rate stood at 18%.

The banking sector remains one of the most profitable segments of Ukraine's economy, benefiting in part from high interest rates and increased holdings of government securities during the war.

Under the current quarterly levy, Ukrainian banks are expected to pay nearly UAH27bn ($608mn) in taxes for the first quarter of 2026 alone, highlighting the sector's growing contribution to state finances.

The IMF had previously expressed reservations that repeated windfall-style taxation could discourage banks from expanding lending to businesses and households, potentially undermining investment and slowing the country's economic recovery.

However, the Fund ultimately agreed to Ukraine's request, reflecting the government's need to secure additional budget revenues while continuing to rely on external financial support.

Economists say the key challenge will be balancing short-term fiscal gains against the longer-term need to stimulate credit growth in an economy facing reconstruction costs that are expected to run into hundreds of billions of dollars. While higher bank taxes provide an immediate source of revenue, a prolonged period of elevated taxation could reduce incentives for lenders to increase financing for private-sector investment, potentially weighing on growth prospects in the years ahead.