Ukraine approves 'historic' war tax hike to help cover defense spending

• Ukraine approved a wartime tax increase on Thursday.
• The new law will raise war tax from 1.5% to 5% for residents.

Ukraine's parliament approved a war tax increase on Thursday.

The bill will raise a military tax on residents from 1.5% to 5% and see corporate tax on banks' profits climb to 50% for the year.

It will also raise taxes on financial institutions' — excluding insurance companies — profits to 25% from 2025.

According to the Verkhovna Rada's website, 247 members of parliament approved the increases.

Yaroslav Zhelezniak, a Ukrainian lawmaker, described the increases as "historic."

Ukrainian President Volodymyr Zelenskyy will still need to sign off on the bill, per Reuters.

Ukraine's parliament increased defense spending by almost 500 billion hryvnia (around $12.1 billion) in July in a bid to bolster the country's armed forces amid the ongoing war against Russia.

"Financing the needs of the Defence Forces is now a top priority. Additional funds for weapons, fortifications and salaries for servicemen are a critical component of countering the military aggression of the Russian Federation against Ukraine," Yuriy Dzhygyr, Ukraine's deputy defense minister, said at the time.

It comes a day after the EU agreed on a new loan of up to 35 billion euros (roughly $38 billion) to Ukraine.

"The up to €35 billion MFA loan is the EU's contribution to the G7 loan of up to €45 billion," the Council of the EU said in a statement. The loan is backed by frozen Russian sovereign assets.

Meanwhile, Zelenskyy met British Prime Minister Keir Starmer and new NATO chief Mark Rutte in London on Thursday.

In a post on X, Zelenskyy said the trio had focused on "Euro-Atlantic integration and the military reinforcement of Ukraine."