Ukraine’s parliament passes historic tax hike, scrapes plan for 5% military levy
Source: Yaroslav Zleleznyak/Telegram
On October 10, Ukraine’s parliament made a landmark move by passing a new tax reform bill that introduces big changes to the tax system during martial law. The lawmakers though chose to scrape one of the most controversial plans that could see military levy go from 1.5%, to 5%.
Bill No. 11416-d garnered the support of 247 MPs in its second reading. According to MP Yaroslav Zheleznyak, the updated law will take effect retroactively from October 1.
This new law introduces several important adjustments, including:
- Military Levy Unchanged: the tax will remain at 1.5%. However, the law extends this levy to sole proprietors under the simplified tax system, including a 1% levy on income for third-group payers and a fixed 800 hryvnias monthly fee for sole proprietors in groups one, two, and four.
- Bank Profits: Banks will face a 50% profit tax for 2024, marking a significant rise in taxation for the financial sector.
- Non-Bank Financial Institutions: These organizations will see their profit tax rate set at 25%.
- Fuel Retailers will have to deal with a new advance payment scheme for their fule sales.
- Monthly Reporting: The reporting period for taxes and the single social contribution will shift from quarterly to monthly for individual taxpayers.
Iryna Herashchenko, co-chair of the “European Solidarity”said their lawmakers helped block the 5% military levy increase but failed to “delay” the introduction of the record-breaking tax hikes.
Meanwhile, Zheleznyak revealed the effect the military levy can have on wages. He argued that salaries paid out on October 14-15 will still reflect the 1.5% levy, but after the law takes effect, the military levy for October will rise to 5%, impacting future payroll deductions.
The final version of the bill is set for review by the Parliamentary Committee on Tax Policy tomorrow.
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