Rada raises taxes: what will change

10 October 2024 11:47

The Verkhovna Rada has passed Bill No. 11416-d on tax increases. This was reported by "Komersant Ukrainian" with reference to MP Oleksiy Honcharenko.

During the second reading of the bill, the Verkhovna Rada voted for several amendments. In particular, the parliament supported the amendment that leaves the military tax at 1.5% for military personnel.

For everyone else, the military tax will increase from 1.5% to 5%.

In general, the draft law (in the version after the committee)

increases the military tax from 1.5% to 5%
establishment of a withholding tax in the amount of 1% of the income of single tax payers of the third group of individual entrepreneurs;
raises taxes for the 1st and 2nd groups of individual entrepreneurs;
provides for banks to pay 50% of this year’s profit
increases the MPZ for land
25% income tax for financial companies
provides for the payment of 25% of profits by financial institutions
introduces monthly PIT reporting (from January 2025) – previously it was said that this was necessary for “economic booking”
increases the rent for the extraction of crushed stone
exempts cashback from taxation.

Among the “servants of the people”, 192 MPs voted in favour, 18 from the Platform for Life and Peace, one from Voice, 13 from Restoring Ukraine, four from For the Future and 15 from Dovira.

MP Yaroslav Zheleznyak noted that amendment No. 988 (which was taken into account by the Committee) on who exactly is a payer of the increased military fee and what exactly is the object of taxation did not receive votes. Accordingly, the version adopted in the first reading remained in force.

He suggested that the law could be re-voted, as this amendment is about ten pages of text.

“I wouldn’t say that the law on taxes has been passed now…. As I wrote, amendment No. 988 was shot down during the consideration. For the sake of understanding, this amendment is half of the law – it is physically set out on 10 A4 pages. Therefore, it seems to me that we will have to re-vote the law to bring it into some kind of order… In short, I think there are now many legal problems with the text,” the MP added.

The law is expected to enter into force in the 20th of October, but some taxes will have to be paid retroactively.

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Provisions of the draft law:

increase of the military tax for the period until 31 December of the year in which martial law is terminated, namely: increase of the rate from 1.5% to 5% for personal income; establishment of the military tax at 1% of the income of Group III single tax payers; establishment of the military tax for individual entrepreneurs – Group I, II and IV single tax payers at 10% of the minimum wage;
setting the corporate income tax rate for banks at 50% for 2024;
setting the corporate income tax rate for non-bank financial institutions (except for insurers) at 25% from 1 January 2025;
improving the proposed model for determining the amount of advance corporate income tax payments for petrol stations;
change of the tax period from quarterly to monthly for reporting on paid income in favour of individuals (for economic bookings) from 1 January 2025;
pegging the advance payment rate for currency exchange offices to the euro;
extension until the end of the martial law of the exemption for charitable aid received from the budgets of other states;
changes to rent in terms of PSO and crushed stone;
exemption from taxation of income received under the “Made in Ukraine” programme;
changes to minimum retail prices for wine;
changes to the minimum tax liability;
instructing the Cabinet of Ministers to develop a draft law on the transfer of the military fee to the special fund of the State Budget.