The Committee of the Council approved for the second reading the draft law on the redirection of the “military personal income tax”

Author:
Sofiia Telishevska
Date:

The Budget Committee of the Verkhovna Rada (the Ukrainian Parliament) approved draft law No. 10037 on "military personal income tax" for the second reading. The draft law was approved for the first time on September 20.

The text of the project has almost not changed compared to the version that was previously submitted for the second reading: 11 amendments were taken into account, and 1 600 were rejected.

The MP from the "Voice" parliamentary faction Yaroslav Zheleznyak explained that he is currently proposing a draft law:

From October 1 to December 31, 2023 , the "military personal income tax"; should be directed to the state budget in a ratio of 50% to 50%: State Special Communications for drones (UAH 13 billion) and the Ministry of Defense for the purchase of artillery systems (UAH 13 billion).

From January 1 to December 31 of the year in which martial law is suspended or abolished, "military personal income tax" shall be distributed in the following proportions:

  • 45% — State Special Communications for drones (forecast of UAH 43+ billion);
  • 45% — to the Ministry of Strategic Industries of Ukraine for the production of ammunition and weapons (43+ billion UAH);
  • 10% — to military units on the ground (about UAH 10 billion).

What is interesting about the "military personal income tax"

In the first seven months of 2022, the maintenance of military personnel was the largest item of expenditure — 520 billion hryvnias, or a third of all state expenditures since the beginning of the year. Since the military also pays taxes on the income received (in particular personal income tax), the corresponding charges have increased very sharply and on a large scale.

Currently, income from personal income tax is distributed between state and local budgets: 64% goes to community budgets, 15% to regional budgets, and the rest to the state budget.

During the war, the "military personal income tax" became an important source of filling local budgets — the incomes of communities increased eightfold. In 2023, the projected amount of revenues from the "military personal income tax" is expected to be at the level of 96 billion hryvnias. For comparison: in 2021, it was at the level of 12 billion hryvnias.

"Super incomes" were received by those communities on the territory of which military units or training centers are registered. That is, different communities can have radically different incomes, and not all of them "rationally" dispose of a large income.