Taxes will be increased in Ukraine. The Verkhovna Rada voted in favor of the relevant draft law

In Ukraine, taxes will be increased to a historic level. The Verkhovna Rada generally supported draft law No. 11416-d. The draft law was supported by 247 parliamentarians.

The MP Yaroslav Zheleznyak reported this.

During the meeting, the MPs made an amendment to the draft law stating that the military levy for military personnel will remain at the level of 1.5%. For the rest of the Ukrainians, it will be 5%.

The draft law on raising taxes also provides for:

• implementation of the military levy for private enterpreneurs of the I, II and IV groups at the level of 10% of the minimum salary established on the 1st of the reporting month. From October 2024, it is UAH 800 per month;
• private enterpreneurs of the III group will pay taxes in the amount of 1% of income in the form of a military levy;
• 50% tax on bank profits;
• increase of the minimum tax liability for land (MTL) in the amount of UAH 700 and UAH 1 400 per hectare. In the latter case, it refers to situations where the share of arable land in the land area is not less than 50%;
• 25% income tax for all financial companies except insurance companies. Previously, the tax rate for them was 18%;
• exemption of "national cashback" from taxation in 2024-2025;
• monthly reporting on personal income tax, military duty and EUV will begin on January 1, 2025. This is required to implement economy booking;
• Gas stations, depending on the type, will pay different monthly income tax advance payments (this is about 30, 40, 45, 60 or 80 thousand hryvnias for each);
• currency exchange offices will pay an advance payment of income tax. The amount will depend on the population in the city. In Kyiv, it will be €700 (in the hryvnia equivalent, but linked to the euro exchange rate), in cities with a population of more than 50 000 people — €600, in all other settlements — €200.

It is expected that such tax changes should bring UAH 58 billion to the state budget in 2024, and UAH 137 billion — in 2025. This is necessary to close the "hole in the budget" and to finance the Ukrainian army at the required level.

Earlier it was noted that some of these norms will be introduced "retroactively" — from October 1, they will be in effect until the end of the year in which martial law ends. At the same time, the MP Zheleznyak claims that this rule "actually does not exist" — the law will be signed later, so in fact for most taxpayers there will be no retroactive income taxation. However, it is currently unclear how the mechanism will work from the middle of the month.

Yaroslav Zheleznyak emphasized that the parliamentarians, during the voting for the draft law on raising taxes, did not vote for amendment No. 988, which contained several amendments at once and was supposed to finally establish who are the payers of the military levy and exemptions for certain categories of citizens. This amendment was supposed to regulate the implementation of the tax increase law in practice.

Due to the fact that amendment No. 988 was not voted for:

• the military levy for private enterpreneurs I, II and III will be effective from October 1;
• there are no postponements of military meetings for January 1 for anyone;
• those who work in the "Diia.City" mode are also subject to military conscription;
• exceptions for private enterpreneurs in the occupied territories and in the territory of the combat zone;
• the new military levy for private enterpreneurs in the MTL will not be included;

What is wrong with the tax increase draft law?

The main legal department of the Verkhovna Rada analyzed draft law No. 11416-d. The conclusion states that:

• payment of advance contributions from personal income tax, corporate income tax and military duty without taking into account overpayments from these taxes in previous periods and the possibility of returning them does not comply with the principle of equality and non-discrimination of taxpayers;
• payment of an advance payment of income tax for exchange points in euros cancels the constitutional value of the hryvnia;
• retroactive implementation of some legal norms violates Article 58 of the Constitution, which establishes that laws do not have retroactive effect;
• new tax changes make it impossible to properly calculate MTL.

What preceded

On September 17, the Verkhovna Rada supported in the first reading draft law No. 11416d on increasing taxes. After that, on October 4, the Verkhovna Radaʼs Committee on Finance, Tax and Customs Policy supported the draft law for the second reading.

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