Ukrainian President Viktor Yanukovych said yesterday that he had vetoed a controversial tax hike on small businesses that has led to the largest protests in Ukraine since the Orange Revolution.

“I vetoed the tax code today,” Mr Yanukovych told reporters before leaving for a summit in Kazakhstan, adding that he had ordered his government to work on corrections to the original bill.

It was not immediately clear when the new version would be submitted for Parliamentary approval.

Mr Yanukovych has committed himself to reforming the country’s convoluted tax system, which ranked third-from-bottom in a 183-nation ranking compiled this year by the World Bank.

But his plan to introduce a tax regime that his government calls the most liberal in Europe has come up against an unexpected wave of street protests just as he seemed to be asserting his authority after taking power in February.

The protesters have set up tents for a non-stop sit-in on Kiev’s Independence Square that was also the hub of the Orange Revolution.

During a surprise visit to the protesters’ camp on Saturday, Mr Yanukovich met leaders of small- and medium-sized businesses and promised to veto the project.

Small business leaders say the new tax code is weighed heavily against them and in favour of big enterprises that are allegedly close to Mr Yanukovych’s ruling Regions Party.

It also increases the powers of the tax office, which is already routinely accused of treating businesses arbitrarily.

Mr Yanukovich said draft law on the new tax code will be amended by a working group that includes both government officials and representatives of small and medium-sized businesses.