A law that increases taxes in Ukraine has already entered into force

On November 28 2024, the President of Ukraine signed the law "On Amendments to the Tax Code of Ukraine Regarding the Features of Taxation During Martial Law" No. 4015-IX, also known as draft law No. 11416-d (hereinafter - the Law), which generally provides for an increase in taxes in Ukraine and improves their administration. The law entered into force on December 1 2024, except for certain provisions that will come into force on January 1 2025.

Military tax (MT)

The increase of the MT rate and the obligation for unified tax payers to pay tax are two of the key changes introduced by the Law. 

Namely, the Law establishes that from December 1, 2024, and until the end of the year in which martial law ends, the MT rate on personal income (wages, dividends, additional benefits, etc.) will be 5% instead of 1.5%. However, the MT rate for military personnel and employees of law enforcement agencies, as defined in the Law, remains at 1.5%. Also, OVDPs, military bonds, social benefits, pensions, scholarships and other incomes that are not subject to personal income taxation, will continue to be exempt from MT. 

The Law provides that for the period from October 1, 2024, until the end of the year in which martial law ends: 

• private entrepreneurs who are unified taxpayers of the 1st, 2nd, and 4th groups are obliged to pay a monthly MT in the amount of 10% of the minimum wage (currently UAH 710). Therefore, even if such private entrepreneurs do not carry out entrepreneurial activity or receive income or profit, they still have an obligation to pay MT. The payment term is no later than the 20th of the current month. Advance payment of the MT for the entire reporting quarter or year is also allowed; 
• unified tax payers of the 3rd group are obliged to pay MT in the amount of 1% of income quarterly. The payment must be made within 10 calendar days after the deadline for submitting the single taxpayer declaration for the reporting quarter. 

It should be noted that Draft Law No. 9319 should correct the situation regarding taxpayer's obligation to pay tax "retroactively", since the Law provides for the payment of MT for unified tax payers from October 1, which automatically created a debt for such entrepreneurs. Draft Law No. 9319 is intended to establish that the MT rate for all groups will come into effect on January 1, 2025.

Other taxes

Increase in corporate profit tax rates for certain categories of taxpayers 

According to the Law, in 2024 banks must pay corporate profit tax at a 50% rate. At the same time, the Law establishes that all financial institutions (except insurance companies) should pay corporate profit tax of 25% on their profit, adjusted CFC profit of the specified institutions and the payment of dividends by them. 

Introduction and renewal of advance payment of corporate profit tax for certain taxpayers 

The Law envisages changes for taxpayers engaged in the retail fuel trade, namely, such taxpayers must make advance payment in the amount of UAH 30, 45 or 60 thousand per month, depending on the type of gas station, for each point of fuel sale. 

The amount of the advance payments will reduce the tax liability from the corporate profit tax calculated for the reporting period at the basic rate. However, if the amount of advance payments made during the year exceeds the accrued tax liability for that year, that amount will not be carried over to subsequent periods. Also, advance payments made cannot be refunded as excess or wrongly paid taxes and cannot be credited against other payments owed. 

As well, taxpayers who carry out currency exchange are now required to make advance payments for each currency exchange point in the amount of: 

• 700 euros – for a currency exchange point located in Kyiv; 
• 600 euros – for a currency exchange point located in cities with a population of more than 50,000; and/or 
• 200 euros – for other settlements. 

Increasing of the minimum tax liability (MTL) 

The Law provides that from January 1, 2024 and until December 31 of the year in which martial law ends the amount of the MTL cannot be less than UAH 700 per hectare, and for land plots with at least 50 percent of arable land – UAH 1,400 per hectare. Herewith, this rule does not apply to land plots located in the territories where hostilities are possible, which are included in the List of territories on which hostilities are (were) conducted or temporarily occupied by the Russian Federation. 

At the same time, the Law also provides for changes (i) regarding minimum retail prices for wine; and (ii) in the payment of rent for some rent’s payers. 

New reporting terms for some taxes

The Law establishes that the income tax reporting period, a single social contribution and MT are changed from quarterly to monthly. 

A similar reduction in the reporting period is also provided for the submission of tax calculations for: 

• notaries, regarding the provision of information on the issuance of a certificate of inheritance and certified contracts of sale (barter agreements) of movable or immovable property with an indication of the value of each contract and the amount of tax paid; 
• business entities that provide services for the conclusion of exchange agreements or participate in their conclusion, if there is an estimated value of movable property and a document on the payment of tax by the parties to the agreement; and 
• credit unions that pay interest, which is allocated to shared membership fees of credit union members.

The update was prepared by INTEGRITES Tax and Customs team