Tax and levy increases: overview of key changes

Military levy for individual entrepreneurs

The military levy for FOPs is introduced temporarily, from October 1, 2024, until December 31 of the year in which martial law is terminated or canceled.

FOPs in Groups 1, 2, and 4 will be required to pay a military levy amounting to 10% of the minimum wage set on January 1 of the tax year, calculated monthly. As of 2024, this equals 710 UAH.

The payment is made as an advance contribution no later than the 20th of the current month. It is permitted to pay the military levy as an advance for the entire tax period (quarter, year), but no later than the end of the current reporting year.

FOPs in Group 3 will pay a military levy of 1% of their income.

The payment is due within 10 calendar days following the deadline for submitting the single tax return for the reporting quarter. All FOPs, regardless of group, must reflect the amounts of the military levy (including monthly advance payments) in their single tax return.

Military levy for individuals

The military levy rate is increasing from 1.5% to 5%.

There are exceptions for military personnel and employees of the Armed Forces, Security Service, Foreign Intelligence Service, Main Intelligence Directorate of the Ministry of Defense, National Guard, State Border Guard Service, State Protection Service, State Service for Special Communications and Information Protection, and the State Special Transport Service. For these categories, the rate will remain at 1.5%.

The taxable income subject to the military levy includes the following types of income:

• Salaries
• Payments under civil contracts
• Income from the sale of intellectual property rights
• Passive income (dividends, royalties, interest on a bank account or deposit)
• Other types of income

The changes come into effect the day after the law is published. Therefore, income earned by individuals before the law comes into effect will be taxed at the 1.5% rate, regardless of when the payment is made (except for cases explicitly provided by the Tax Code).

The return to the 1.5% rate is planned for January 1 of the year following the year in which martial law is terminated or canceled.

“National Cashback” for Purchasing Ukrainian Goods

The “National Cashback” is a program under which buyers of Ukrainian-made goods and services can receive up to 3,000 UAH per month. These funds will not be included in taxable income for 2024-2025

Profit tax for financial institutions

As a reminder, the base profit tax rate is 18%. However, financial institutions’ profits will be taxed at 25%. These changes will apply to financial institutions such as credit unions, pawnshops, financial companies, and others, except insurance companies.

For banks, there is a special tax rule: a 50% tax rate will be applied to profits for 2024.

Advance payments for each retail fuel sales location

Taxpayers engaged in the retail sale of fuel are required to make monthly advance payments for each location where fuel is sold. These payments are applied to the profit tax (for enterprises) or personal income tax (for individual entrepreneurs).

In most cases, the advance payment amount will be 60,000 UAH. However, there are provisions for reduced payments: 30,000 UAH for locations where only liquefied gas is sold, and 45,000 UAH for locations selling multiple types of fuel, where at least 50% of sales consist of liquefied gas.

Use of Cash Registers (RRO) in the Organization and Conduct of Gambling Activities

Businesses must use cash registers (RRO) and software-based RROs when organizing and conducting gambling activities. This requirement applies to accepting or refunding funds directly or indirectly used for participation in gambling, paying out funds to players, and selling or exchanging gaming tokens — including electronic equivalents of the hryvnia.

Conclusions

The changes are intended to ensure balanced budget revenues during martial law. Therefore, it can be concluded that the increase in taxes and levies is viewed as a temporary measure.

The law will come into effect the day after its publication, with some provisions starting on January 1, 2025.

Published by AIN.UA

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