The increase in taxes will allow an additional 58 billion hryvnia to be collected in the state budget in 2024.
In the context of an acute shortage of funds to finance the Defense Forces, the state plans to increase certain taxes from October.
This is stated in the material “RBK-Ukraine”.
On September 17, the parliament approved the corresponding bill (No. 11416-d) in the first reading. It is expected that the document will be adopted in the second reading by mid-October, and if it is approved, tax changes can be introduced “retroactively” from October 1.
It is expected that from October, the increase in taxes will additionally replenish the state budget by 58 billion hryvnia in 2024 and by 137 billion hryvnia in 2025.
The main source of this revenue is the increase in the military tax on citizens' incomes from 1.5% to 5%
This means that the employer will have to pay 3.5 percentage points more in taxes on the official salary of hired workers. At the same time, the personal income tax rate (PIT) will remain unchanged at 18% in accordance with the provisions of the said law. There are also no plans to increase the single social contribution (SSC), which employers deduct from the wage fund in the amount of 22%, from October — this rate remains unchanged.
Thus, if now 18% income tax (PIT) and 1.5% military tax (MT), which is 19.5% or 195 UAH, are withheld from every 1,000 UAH of an employee's salary, then from October 2024 (and until December 31 of the year), the tax will be increased to 18% PIT and 5% MT, which in total will be 23% or 230 UAH from every 1,000 UAH of salary.
The increased rate of the military tax will also affect the interest income of citizens on deposits. Previously, such income was taxed at 19.5%, and with the introduction of the new rate it will be 23%.
Military tax for single tax payers of individual entrepreneurs of group 3
This means that individual entrepreneurs of the third group, who pay a single tax of 5% of income, will now additionally pay 1% of military tax. For example, now for every thousand hryvnia of monthly income, individual entrepreneurs of the third group pay 50 hryvnia of single tax. In October, this amount will increase to 60 hryvnia.
- Read also: Tax increase in Ukraine: who is exempt from paying military tax
It is not yet clear how exactly the procedure for paying and administering this additional 1% will be organized. Now individual entrepreneurs independently pay a single tax of 5%. However, the additional 1% is a separate tax, and the procedure for paying it will differ from the one that would be used if the single tax were simply increased from 5% to 6%.
Military tax for single tax payers of individual entrepreneurs of groups I, II and IV
This means that the specified categories of taxpayers, in addition to the taxes already paid, will be required to pay UAH 710 per month from October 2024 until the end of 2024, and UAH 800 from 2025.
UAH 710 corresponds to 10% of the minimum wage as of January 1, 2024, while UAH 800 is 10% of the minimum wage as of January 1, 2025.
Setting the bank income tax rate for 2024 at 50%
How this will affect ordinary Ukrainians remains an open question. First of all, the changes will affect the income of banks, which in 2024 will have to pay a profit tax of 50% instead of the current 25%. This will most likely lead to changes in the tariff and interest rate policies of banks, including commissions, rates on deposits and loans, etc.
As a result, ordinary users of banking services will have to pay for these changes. However, this will not have a direct impact on the amount of taxes they pay or their income.
Establishing monthly advance payments on income tax for enterprises engaged in retail fuel sales
The introduction of a new type of taxation for gas stations will allow the state to receive more predictable and controllable flows of tax revenues to the budget. This will not have a direct impact on the income or tax payments of citizens. However, it may affect the pricing policy of gas stations. For example, some companies may raise fuel prices, which, in particular, may cause a chain reaction in consumer prices. However, it is difficult to predict such changes.
Recall that the head of the IMF in Ukraine, Gavin Gray, supports the authorities' decision to increase taxes for the population.
In Ukraine, rates on the main taxes may be raised as early as 2024 – such a decision was prepared by the government. And from 2025, taxes will also be increased for individual entrepreneurs. The purpose of such changes is to balance the budget, to be able to continue Ukraine's defense, and to harmonize the demands of international partners.