Starting from December 1, 2024, a law on a significant increase in taxes comes into force in Ukraine, aimed at providing additional revenue to the state budget. The main purpose of the law is to finance the country’s defense needs. Let’s consider the details of these changes and their impact on citizens and businesses.
Main Changes for Citizens
- Increase in Military Fee:
The new law raises the military fee rate from 1.5% to 5%. This means that for every thousand hryvnias of salary, 50 hryvnias will now be withheld instead of 15. The rate remains unchanged for military personnel. - Taxes for Individual Entrepreneurs:
- For entrepreneurs under the simplified taxation system (I, II, IV groups), a military fee of 10% of the minimum wage is introduced.
- For entrepreneurs in group III – an additional fee of 1% of income is introduced.
- New Reporting Rules:
Starting from 2025, all tax agents are required to submit monthly reports on the Unified Social Contribution (USC), Personal Income Tax (PIT), and military fee.
Business Impact
- Corporate Taxes:
- Advance payments are introduced for gas stations, the amount of which depends on the type of fuel and the presence of shops or points of sale of alcohol and tobacco.
- Currency exchange points will also pay tax in advance, the amount of which is linked to the euro exchange rate.
- Agricultural Sector:
The minimum tax liability for farmers is increased to 1400 hryvnias per hectare for land with arable land comprising more than 50% of the plot. - Financial sector:
Banks are required to pay a 50% corporate tax for the year 2024. For non-banking financial institutions, the rate will increase from 18% to 25% in 2025.
Reasons for the Changes
The law is designed to provide the state budget with an additional 21 billion hryvnias this year. Overall, the government plans to mobilize 500 billion hryvnias for defense needs. President Volodymyr Zelensky noted that the decision on taxes should be fair, but its adoption has sparked lively discussions in the business community.
Forecasts and Reactions
The increase in tax burden has been perceived ambiguously by society. Citizens fear the growth of the shadow economy, and businesses may reduce activity due to new financial obligations. At the same time, the government assures that these measures are temporary and aimed at supporting the economy in times of war.
The first results of the changes are expected in the year 2025, when all provisions of the law come into effect. The question remains open as to how quickly the Ukrainian economy can adapt to the new tax realities.
