Ukrainian parliament to raise military tax to 5% retroactively

Source: Yaroslav Zheleznyak/Telegram

The Verkhovna Rada is expected to increase the military tax from 1.5% to 5% this month, making the policy effective  retroactively – from October 1, according to MP Yaroslav Zhelezniak who co-chairs Parliamentary Tax Policy Committee.

The lawmaker revealed there was much wraggling over the date issue.  The law is likely to be passed after October 15, but will apply retroactively from the start of the month.

Apart from the military tax hike, Danilo Hetmantsev, the committee’s chair, proposed other adjustments, including:

• Monthly reporting on personal income tax (PIT) starting from 2025.
• For income subject to annual declaration, the military tax will remain at 1.5% through 2024, but will rise to 5% in 2025.
• For single tax payers in the third group, the increased tax will take effect in the first quarter after the law’s adoption.
• Real estate transactions will be taxed once the law is enacted.
• October salaries will need to be recalculated using the new tax rate, although any advance payments made before the law takes effect will not require adjustment.
• The military tax will not apply to individual entrepreneurs (FOPs) exempt from paying the single tax, particularly those operating in frontline and de-occupied areas.

According to Zheleznyak, the parliament also plans to collect higher gravel mining royalties but will keep the PIT exemption for foreign aid provided to refugees.

He explained that people will continue to have 1.5% deducted from their mid-October advance pay, as the law will not yet be in effect. Once it is enforced, military tax on October wages will rise to 5%, impacting both salaries and advances meaning that employers will need to deduct the difference when paying the main portion of the salary.