Ukraine will set the lowest taxes in Europe, Prime Minister Mykola Azarov has said, while presenting the draft Tax Code on Friday.

"We have prepared a draft Tax Code, which is based on the principle of reducing the tax burden on businesses. We will maximally liberalize legislation, but everybody should pay all taxes. We will set low taxes, probably, the lowest taxes in Europe, and cancel the taxes that impose a burden [on businesses]," he said.

Azarovsaidthat budgetary revenues could be reduced at the first stage of tax reform, but starting from 2012, when the second stage of reform is to be conducted, tax revenues are expected to grow.

If the new Tax Code comes into force and a zero tax rate on profit is introduced for the light industry, hotels and small businesses, the total amount of the consolidated budget for 2011 is expected at UAH 450 billion (UAH 7.89 / USD 1), he said.

A key innovation of the Tax Code, Azarov said, will be a single tax for individuals with an annual turnover of UAH 200,000, "despite the fact that daily proceeds of a subject, who works under a single tax, are UAH 1,000."

The second innovation, according to the prime minister, is a gradual reduction in income tax from 19% to 16%.