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Ukraine's shadow economy hits 42 percent of GDP

Xinhua, May 15, 2015 Adjust font size:

The shadow economy in Ukraine has increased by 7 percentage points last year to 42 percent of the country's gross domestic product (GDP), the Economy Ministry said Friday.

"The share of the shadow economy in Ukraine in 2014 rose to its highest level since 2007," the ministry said in a report.

According to the report, the military conflict in the country, financial instability, sharp fluctuations of the local currency, panic moods of economic agents and increased administrative pressure were the main factors behind the increase.

In April, Ukraine's Finance Ministry estimated the proportion of the shadow economy in the country's GDP at 40 to 60 percent, saying that tax evasion, envelope wages and hidden incomes from monetary operations form the lion's share of the informal economy.

To tackle the growing shadow economy, the State Fiscal Service is now preparing a new taxation system reform, which is set to be implemented by autumn. Endi