Tax and fee increases: what ukrainians and businesses can expect in 2024

Changes for individuals

Increase in the military tax rate from 1.5% to 5%.

The 5% rate will apply to the taxation of the following types of income:

• Salary;
• Remuneration under civil law contracts;
• Income from the sale of intellectual property objects;
• Royalties;
• Income from leasing, renting, or subleasing property;
• Passive income (dividends, royalties, interest on bank accounts, deposits);
• Income in the form of inherited or gifted property value;
• Other types of income.

Establishment of a new obligation to pay military tax at the following rates:

• 15% of the value of a passenger car acquired for the first state registration in Ukraine;
• 5% of income from the sale of real estate (apartment, house, land plot, etc.) during the reporting tax year;
• 5% of the value of purchased bank metals.

Changes for sole proprietors

Introduction of the obligation for monthly payment of military tax for sole proprietors on the simplified taxation system:

• 1% for single taxpayers of the 3rd group. The taxable object is the income of the sole proprietor.
• 5% for single taxpayers of the 1st, 2nd, and 4th groups. The taxable object is an amount equal to the size of two minimum wages as of January 1 of the tax year.

It should be noted that sole proprietors in the simplified taxation system pay only a single tax, with the third group potentially also paying VAT.

• 1st group: single tax of 10% of the subsistence minimum (302.8 UAH/month);
• 2nd group: single tax of 20% of the minimum wage (1420 UAH/month);
• 3rd group: 3% of income for VAT payers or 5% for non-VAT payers.

Changes for legal entities

Legal entities as tax agents will pay the military tax at an increased rate (5% instead of 1.5%). This applies particularly to paying employees’ salaries, dividends to founders, etc.

Introduction of the obligation for monthly payment of military tax at the rate of 1% of income for legal entities:

• Profit taxpayers;
• Single taxpayers of the 3rd and 4th groups.

Currently, profit taxpayers pay tax at a rate of 18%.

Single taxpayers in the 3rd group pay tax at a rate of 3% of income for VAT payers or 5% for non-VAT payers.

For single taxpayers of the 4th group, the tax rates depend on the category (type) of land and its location.

If a legal entity acquires a passenger car that will be registered for the first time in Ukraine, a new obligation is established to pay a 15% military tax on its value.

If bank metals are acquired, the military tax rate is 5%.

Changes for excise tax payers

It is proposed to classify water, including mineral and carbonated water, with added sugar or other sweetening or flavoring substances as excisable goods. The tax rate is set at 0.1 euros per liter of beverage.

In addition to the aforementioned changes, other provisions are envisaged for-profit taxpayers, VAT, military tax regarding mobile communication services, and the sale of jewelry.

Please note that the draft Law of Ukraine, “On Amendments to the Tax Code of Ukraine and Other Laws of Ukraine Regarding Taxation Features During Martial Law,” is not final. The draft law has been submitted to the Verkhovna Rada of Ukraine for consideration. Amendments may be made. Notification of the law’s adoption will be provided additionally.

The law is expected to come into force on the first day of the month following its publication, but this can be assumed to not happen before September.

If you have any questions about potential innovations or tax strategies, our specialists will gladly provide specialized consultations.

Conclusions

Please note that the draft Law of Ukraine, “On Amendments to the Tax Code of Ukraine and Other Laws of Ukraine Regarding Taxation Features During Martial Law,” is not final. The draft law has been submitted to the Verkhovna Rada of Ukraine for consideration. Amendments may be made. Notification of the law’s adoption will be provided additionally.

The law is expected to come into force on the first day of the month following its publication, but this can be assumed to not happen before September.

If you have any questions about potential innovations or tax strategies, our specialists will gladly provide specialized consultations.