Rada has significantly raised taxes: here's what every Ukrainian will now have to pay.

The Verkhovna Rada has made a decision on a record tax increase in Ukraine. The law is expected to come into effect in the 20s of October, but certain taxes will need to be paid "retroactively".

Who, how much, and when needs to pay the new taxes – read in the overview by RBC Ukraine's financial editor Ruslan Kislyak.

On October 10, the Verkhovna Rada approved the draft law №11416-д aimed at increasing taxes, designed to partially find additional funds in the budget for financing the army. The corresponding initiative was supported by 247 members of parliament.

New Taxes

Starting in October, certain major corporate taxes will increase.

Advance payments on profit tax for gas stations are being introduced. This will look like this.

A fixed tax payment to the state budget will be paid in advance (regardless of the amount of future profit) separately for each retail fuel outlet.

For gas stations that do NOT sell alcoholic beverages and/or tobacco products:

• 60,000 hryvnias;
• 30,000 hryvnias – for gas stations selling exclusively liquefied gas;
• 45,000 hryvnias – for gas stations selling several types of fuel, where the share of liquefied gas sales is 50% or more.

For gas stations that sell alcoholic beverages and/or tobacco products:

• 80,000 hryvnias;
• 40,000 hryvnias – for gas stations selling exclusively liquefied gas;
• 60,000 hryvnias – for gas stations selling several types of fuel, where the share of liquefied gas sales is 50% or more.

Market experts do not rule out that paying a fixed tax amount in advance is unlikely to be a problem for large retail gas station chains, but it could pose challenges for smaller market players in the regions.

However, that's not all. If the paid advance exceeds the amount of the accrued tax obligation, the excess amount cannot be carried over to reduce tax obligations in subsequent periods. Additionally, the paid advance will not be refunded to the taxpayer as excess or erroneously paid tax obligations and cannot be credited against other taxes and fees.

If the owner of a gas station fails to pay the agreed advance profit tax on time, they will be subject to a penalty.

Profit tax payment for currency exchange offices is tied to calculations in euros.

The profit tax for currency exchange offices is also paid in advance separately for each foreign currency exchange point. The advance amount is as follows:

• 600 euros (in hryvnia equivalent) – for settlements with more than 50,000 residents (excluding Kyiv);
• 700 euros – for Kyiv;
• 200 euros – for settlements with up to 50,000 residents or outside of settlements.

Rental fees for gravel producers are increasing.

A 50% profit tax for banks will need to be paid based on the results of their activities in 2024.

A 25% profit tax for financial organizations (other than banks) will also need to be paid based on the results of 2024. This applies to companies like LiqPay, Portmone, NovaPay, etc. Previously, their tax rate was 18%.

For agricultural producers, the minimum tax obligation is increasing. From now on, the procedure for calculating the minimum tax obligation (MNO) is changing, and the minimum amount payable cannot be less than 700 hryvnias per hectare of land. For land parcels where the share of arable land is at least 50% – 1400 hryvnias per hectare.

Income received by citizens under the state program "Made in Ukraine" (the so-called "National Cashback") is exempt from taxation.

New Tax Reporting

The next block of tax innovations concerns reporting procedures.

Starting January 1, 2025, monthly reporting for Unified Social Contribution (USC), Personal Income Tax (PIT), and Military Tax will be introduced for all tax agents, including notaries. Until the end of 2024, the corresponding tax reporting will be provided on a quarterly basis.

Tax breaks allowing exemption from filing property and income tax declarations for individuals receiving charitable assistance in Ukraine or from abroad will continue until the end of martial law. This applies to both internally displaced persons and those abroad who have temporary protection status and receive payments.

Individual entrepreneurs (IEs) will submit reports on military tax payments for the first time – in the annual report for 2024 starting October 1.

Military Tax on Salaries: New Rules

The military tax on any income of individuals, including salaries, is increasing from 1.5% to 5%. However, this regulation will take effect in several stages.

In the first stage, the military tax will increase for salaries. This will occur starting October 1, even though the corresponding law will come into effect closer to the end of the month.

This will look as follows. From the first part of the salary that a person receives before the law comes into effect, the employer will withhold a military tax of 1.5%. When paying the second part of the salary at the end of October, when the law is expected to come into effect, a military tax of 5% should be withheld from the second part of the salary, and an additional 3.5% military tax should be calculated from the first part of the salary.

The increase in military tax from 1.5% to 5% means that from the official salary of hired employees, the employer will pay 3.5 percentage points more in taxes. Meanwhile, the personal income tax (PIT) rate remains unchanged at 18%, according to the aforementioned law.

There is also no increase in the Unified Social Contribution (USC), which the employer pays on the wage fund at a rate of 22%. This figure remains unchanged.

Therefore, if currently from each 1,000 hryvnias of salary for a hired worker, 18% PIT + 1.5% military tax = 19.5% or 195 hryvnias is deducted from the state budget, then starting October 2024 (and until December 31 of the year when martial law is lifted), from each 1,000 hryvnias of salary, the tax will be 18% PIT + 5% military tax = 23% or 230 hryvnias.

The increased military tax rate will also apply to interest income of citizens from deposit accounts. Previously, such income was taxed at 19.5%, but now it will be 23%.

Important! If an employee resigns after October 1 but before the law comes into effect, the military tax at the rate of 1.5% should be withheld from their salary.

Another important nuance is that the military tax rate for military personnel remains at 1.5%.

Overall, starting October 1, 2024, the military tax is increased specifically for tax agents who pay taxes and report for hired employees – individuals. For individuals declaring their income (this particularly concerns income from securities, rental income, dividends, income from foreign sources, etc.), the military tax remains at 1.5% until the end of 2024. They will pay the military tax at the rate of 5% starting in