Taxes have increased: a new law has come into effect. Find out how much Ukrainians will need to pay now.

Taxes have increased: a new law has come into effect, how much Ukrainians will have to pay

The law for a record increase in taxes in Ukraine has come into effect. Among other things, it includes an increase in the military tax, but there will be no separate taxes applied retroactively.

This was reported by RBK-Ukraine citing the law published in the parliamentary newspaper "Golos Ukrainy".

It is worth noting that earlier, Prime Minister Denys Shmyhal stated that the tax increase law would come into effect on December 1, 2024. However, according to the text, it takes effect the day after publication, which is today, November 29.

Additionally, it was expected that certain taxes would be increased from October 1 and would be collected retroactively. But, as Finance Minister Serhiy Marchenko assured, "there will be no retroactive taxes," and the necessary changes will be prepared in a separate law.

Military tax on salaries

The military tax on any income of individuals will increase from 1.5% to 5% from the day it comes into effect. This includes salaries.

In practice, this means that employers will pay 3.5% more in taxes on official salaries. The personal income tax (PIT) remains unchanged at 18%. The rate for the unified social contribution (USC) also remains at 22%.

This means that payroll taxes will amount to 23% instead of the current 19.5%. Or 230 hryvnias for every one thousand earned, instead of 195 hryvnias.

The increased military tax rate applies to interest income of individuals from deposits. However, for military personnel, it remains at 1.5%.

Notably, the 1.5% rate applies to income accrued before the new rate comes into effect. For instance, the old military tax applies to advances in the first half of October.

Military tax on individual entrepreneurs' income

For individual entrepreneurs of groups I, II, and IV of the single tax, a military tax at 10% of the minimum wage (as of the first day of the month) is introduced. Currently, the minimum wage is 8000 hryvnias, so the aforementioned categories will have to pay an additional 800 hryvnias per month on top of their current taxes.

As for individual entrepreneurs of group III on the "simplified" tax system, they will be required to pay a military tax of 1%. Previously, they paid 5% of their income, so now they will need to pay 60 hryvnias per month for every thousand earned instead of 50.

Changes in tax reporting

Starting January 1, 2025, monthly reporting on the unified social contribution, personal income tax, and military tax will be required for all tax agents. Quarterly reporting will remain in effect until the end of this year.

Benefits are extended that allow individuals receiving charitable assistance (including from abroad) to not submit a tax declaration regarding their property and income. This provision applies to internally displaced persons and Ukrainian refugees abroad who receive payments.

Individual entrepreneurs will also be required to report on military tax payments. They will need to submit this for the first time in the report for 2024 (starting from October 1).

How corporate taxes will increase

For gas stations, advance payments on profit tax will be introduced. These will be fixed amounts, depending on the number of retail fuel outlets and the presence of stores.

For gas stations that do not sell alcohol and/or tobacco products, the advance payment will be 60,000 hryvnias. If only automotive gas is sold, it will be 30,000 hryvnias. If several types of fuel are sold but gas constitutes over 50%, it will be 45,000 hryvnias.

For gas stations that sell alcohol and/or tobacco products, the advance payment will be 80,000 hryvnias. If only automotive gas is sold, it will be 40,000 hryvnias. If several types of fuel are sold but gas constitutes over 50%, it will be 60,000 hryvnias.

Failure to pay the advance amount for profit tax may result in a penalty.

Additionally, the profit tax for currency exchange points (also on an advance basis) is tied to the euro. Specifically, it will amount to 600 euros in hryvnia equivalent for cities with over 50,000 residents (excluding Kyiv), 700 euros for Kyiv, and 200 hryvnias for settlements with up to 50,000 residents.

The rent payment for the extraction of gravel, sand, and coal will increase. Banks will have to pay a profit tax of 50% based on their results for 2024. The profit tax for non-banking financial organizations will be 25% based on their results for 2025 (currently 18%).

The minimum tax liability for agricultural producers is also increasing. Now the minimum amount cannot be less than 700 hryvnias per hectare. For plots where the share of arable land is over 50%, it will be 1400 hryvnias per hectare.

Income from the Ukrainian government program "National Cashback" is exempt from taxation.

Ukrainian businesses were dissatisfied with the proposals (including the introduction of a turnover tax). After meetings with businessmen, President Volodymyr Zelensky stated that tax decisions should be fair.

Initially, it was planned that the tax increases would bring 138.7 billion hryvnias to the budget in 2024. According to the head of the tax committee of the Rada, Danylo Hetmantsev, the law in its final form is expected to bring in 21 billion this year.