The President of Ukraine has signed a law amending the Tax Code. These amendments are necessary to finance the defence forces, in particular, to pay salaries to Ukraine’s defenders.

We answer the main questions about the innovations of the Tax Code.

Will the new taxes be applied retroactively?

The law on tax changes comes into force on 1 December. Therefore, taxes will not be charged retroactively. The Parliament will soon adopt the necessary amendments to the tax law to harmonise the operation of all the rules from 1 December, including those for individual entrepreneurs.

How will the military tax rate for individuals change?

The military tax rate for individuals will increase from 1.5% to 5%. This applies to taxation of salaries, rent, winnings, bank deposits, etc.

How will the military tax rate for individual entrepreneurs change?

It all depends on the group to which the individual entrepreneur belongs.

Individual entrepreneurs of the first, second and fourth groups will pay 10% of the minimum wage set at the beginning of 2025 (UAH 8,000). Thus, they will pay UAH 800 per month. The new taxes will be effective for this category of taxpayers only from 1 January 2025.

Individual entrepreneurs of the third group will pay a military tax of 1% of their turnover in the first quarter of 2025. The law will also come into effect for them from the beginning of the new year.

Does the military tax apply to social benefits?

The military tax does not apply to social benefits. It also does not apply to pensions, scholarships and other income that is not subject to personal income tax. In addition, the military tax does not apply to domestic government bonds purchased by individuals.

What resources does the Government plan to raise from the tax increase?

By the end of this year, we plan to receive UAH 8 billion, and in 2025 – UAH 140 billion.

What will these funds be used for?

These funds will be used primarily to pay salaries to Ukrainian service members. In total, we plan to spend UAH 1.16 trillion to provide for our soldiers next year. This is UAH 10 billion more than in 2024.

Earlier, there was talk of a shortfall of UAH 500 billion for defence this year. Where does the Government get the rest of the money from?

Tax increases are only a small part of a comprehensive effort to raise domestic resources.

We receive UAH 216 billion through the placement of domestic government bonds, which is our domestic borrowing.

Another UAH 100 billion is the overperformance of state budget revenues, including through the de-shadowing of the economy.

We are also using part of the banking sector’s income for defence. This year, banks made the largest profit in their history. This is primarily due to the fact that they worked with the National Bank and government obligations.

We are also saving some money by restructuring the public debt.

What other tax changes does the new legislation envisage?

At the request of the Ukrainian Agri Council, the minimum tax payment per hectare of agricultural land is being increased to UAH 1,400 per hectare. This will improve the transparency of relations in the agricultural sector.

At the request of representatives of the oil and gas sector, an advance payment of income tax for each individual petrol station is introduced. This will make legal market participants more competitive.

At the request of the Ukrainian wine industry, the minimum price for Ukrainian-made wine products is being raised. This will allow producers using normal raw materials to be competitive in the market.

The rent for sand and gravel is being increased. This will ensure fair taxation of the developers of Ukrainian subsoil.

All these changes have been developed in close cooperation with industry associations.

In addition, the new law introduces monthly reporting on personal income tax and unified social tax instead of quarterly. This will ensure transparency and fairness in the reservation of employees.

Why can’t we use the funds provided by our partners for defence?

Our partners finance only non-defence civilian expenditures.

It is logical and understandable that each country finances its army independently, as this is one of the signs of its sovereignty.

Moreover, our partners, including the IMF, insist on raising taxes, as this adds to our financial stability and reliability as a borrower.

At the same time, Ukraine is seeking to attract funds from russia’s frozen assets for defence purposes. This financial resource of the enemy, which has caused us so many losses, should work against it, for our victory.

Does the state budget for 2025 take into account tax changes?

The 2025 budget is calculated taking into account all changes to tax legislation.