Tax and fee increases: key changes for individual entrepreneurs and individuals

A military tax has been introduced for individual entrepreneurs (IEs) under the simplified taxation system

The military tax rate varies for each group of single taxpayers:

• IEs in Groups 1, 2, and 4: The military tax is set at 10% of the minimum wage (MW) established as of January 1 of the tax year.
• As of January 1, 2025, the MW is UAH 8,000, resulting in a monthly military tax of UAH 800.
• Payment is made as an advance contribution by the 20th (inclusive) of the current month. Advance payment for a quarter or year is allowed, but no later than the end of the current reporting year.
• IEs in Group 3: The military tax is 1% of income.
• Payment must be made within 10 calendar days after the deadline for filing the tax return for the reporting quarter.
• The same rules apply to legal entities in Group 3.

All IEs, regardless of their group, must report military tax amounts, including monthly advance military tax payments, as part of their single taxpayer declaration.

Effective Period: From January 1, 2025, to December 31, the year martial law is terminated or repealed.

Increase in military tax rate for individual entrepreneurs on the general taxation system

The military tax rate increases from 1.5% to 5% for individual entrepreneurs (IEs) in the general taxation system.

Increase in military tax rate for individuals

The military tax rate increases from 1.5% to 5%.

Exceptions apply to military personnel and employees of the Armed Forces, Security Service, Foreign Intelligence Service, Main Directorate of Intelligence of the Ministry of Defense, National Guard, State Border Guard Service, State Protection Service, State Service for Special Communications and Information Protection, and State Special Transport Service. The rate remains at 1.5% for these categories.

The taxable income for the military tax includes wages, compensation under civil-law agreements, revenue from the sale of intellectual property rights, and passive income (dividends, royalties, interest on bank accounts, deposits, and other types of income).

The changes are effective from December 1, 2024. Income subject to military tax accrued for tax periods before December 1, 2024, will be taxed at a rate of 1.5%, regardless of the actual payment date.

A return to the 1.5% rate is planned starting January 1 of the year after the year martial law is terminated or repealed.

Filing of income reports by individuals

Reinstatement of the obligation for individual entrepreneurs to pay unified social contribution (USC)

Starting January 1, 2025, the provision allowing individual entrepreneurs (IEs) to refrain from accruing, calculating, and paying USC for themselves will no longer apply. From this date, all IEs, regardless of their taxation system, must pay USC in an amount of at least UAH 1,760 per month.

Conclusions

Most of the changes will take effect on December 1, 2024, while some will become effective on January 1, 2025.

We recommend that individual entrepreneurs (IEs), individuals, and their tax agents carefully review the new provisions. This will help avoid violations and ensure proper fulfillment of tax obligations.