Tax Increase, State Budget 2025 Signed

Law on Tax Increase Enters into Force on 1 December 2024

On 1 December, the Law of Ukraine No. 4015-IX dated 10.10.2024 (the “Law”), which has been much discussed in recent months and introduces an increase in a number of tax rates, entered into force.

The main provisions of the law are summarized below.

  1. Increase in Military Tax Rate
    The Law provides for an increase in the military duty rate for employees and individual entrepreneurs under the general taxation system – from 1.5% to 5%.
    The amendments will become effective on 01.12.2024 and will remain in force until 1 January of the year following the year in which martial law is terminated or lifted. After that, the tax will be paid at the usual rate of 1.5%.
    The military tax rate of 1.5% remains for military personnel and employees of the Armed Forces and other defense agencies.
  2. Establishment of Military Duty for Single Tax Payers
    The Law establishes the obligation of legal entities and individual entrepreneurs who are single tax payers to pay military duty starting from 01.01.2025.
    The rate for single tax payers of groups I, II and IV will be 10% of the minimum wage established by law as of 1 January of the tax (reporting) year (currently UAH 710); for group III – 1% of income.
  3. Monthly Reporting on Personal Income Tax
    The Law introduces monthly reporting on personal income tax, social security tax and unified social contribution, instead of quarterly reporting, as it was before. This change is intended to simplify the procedure for booking employees.
    This provision will enter into force on 1 January 2025. Therefore, for the fourth quarter of 2024, reporting will be submitted according to the current rules.
  4. Monthly Advance Payments
    The Law introduced an obligation to pay monthly advance payments of income tax (if the owner is a legal entity) and personal income tax (if the owner is an individual) for owners of gas stations – from UAH 30 to 60 thousand, depending on the type of fuel sold.
  5. Taxation of Financial Sector
    The Law increased the corporate income tax rates: for banks – up to 50%, for other financial institutions (except for insurers) – up to 25%.

By 28 February 2025, All Critical Enterprises Must Confirm Their Status in Accordance with New Criteria

According to the announcement by the Ministry of Economy, companies that have not yet updated their criticality status will be able to book employees, and this booking will be valid until 28 February 2025. After updating the criticality status according to the new mandatory criteria, companies will be able to book employees for a longer period of time – up to 12 months as before.

The Cabinet of Ministers adopted the relevant amendments to Resolutions No. 76 and No. 1332 on 29 November.

Starting from 1 December 2024, the booking procedure will be available through the Diia portal. In order to book its employees, the company must obtain or update its criticality according to the new mandatory criteria. Businesses have more than three months to do so – until the end of February 2025.

The amendments added the following two requirements to the previously established criteria:

  • the accrued average salary in the company for the last calendar quarter must be at least 2.5 times the minimum wage (currently UAH 20 thousand). At the same time,
  • the employee being booked must have a salary that corresponds to the mentioned amount;
  • the company must not have any tax arrears.

Law On State Budget For 2025 Was Signed

On 28 November 2024, the President of Ukraine signed the Law on the State Budget of Ukraine for 2025, adopted by the Verkhovna Rada on 19 November 2024.

For more information on the key macroeconomic indicators set out in this Law, please see our news note of 22 November 2024.