President proposes to send 35% of mining royalty, 47.5% of oil, gas royalty to economic passports from 2023

KYIV. Dec 8 (Interfax-Ukraine) – The president’s package of bills on the economic passport (Nos. 6394-6396) provides for sending 35% of the royalty on mining operations as savings for the economic passport from 2023, with a subsequent annual increase in this share by 5 percentage points (pp), to 70% in 2030, as well as sending 47.5% of the oil and gas production royalty in 2023 for the economic passport with a further increase to 95% in 2033.

This is evidenced by the texts of these bills, published on the parliamentary website on Tuesday.

According to them, these sources of receipts are removed from the receipts of the general fund of the state budget for the generation of a special fund in the state budget.

"These funds, which will go to the special fund of the state budget of Ukraine, will be sent to pay state contributions to the economic passport system," the authors of the bills said in the accompanying documents.

The package of bills presupposes the entry of their main part into force in 2023.

Children born in 2019 will become participants in the Fund for Future Generations, which will accumulate contributions on individual accounts. To receive payments from the economic passport system, as foreseen, one shall reach the age of 18, be a citizen of Ukraine and have permanently resided in the country for the last five years.

The bills also provide that payments from the economic passport system can be spent on studies, the purchase of personal housing, treatment of serious illnesses or if a person is in critical health conditions (up to the age of 18). At the same time, the state guarantees the appropriate payments.

In addition, it is planned that this income will not be taxed.

The president proposes that two minimum wages per participant a year (UAH 14,350 in 2023, according to the Budget Declaration) will be annually contributed to the economic passport system, according to the bill.

The administration of the Fund is proposed to be entrusted to an administrator who possesses a license to administer non-state pension funds and it is state-owned. The management of the Fund’s assets is supposed to be entrusted to an asset management company with an appropriate license. The Fund’s assets, as indicated in the bill, shall be kept in a state-run bank.

As expected in the updated bill on the state budget of Ukraine for 2022, receipts from the royalties will amount to more than UAH 71 billion.

According to the State Statistics Service, from the beginning of 2019 to October 2021, 707,660 people were born in Ukraine.