Since December 1, there have been changes in the withholding of military tax – TSN.ua has collected everything you need to know about this.
Since December 1, there have been changes in the content of the military tax. The main changes provided for in the new law are an increase in the military rate from 1.5% to 5% for individuals on any income. This applies to wages, real estate rent, winnings, bank deposits and other income of citizens.
Accountant and tax consultant Marianna Kavin wrote in her blog what you need to know about the increase in military tax. This is also discussed in the materials of Mind.ua and 7eminar. The main points were collected by TSN.ua.
On December 1, 2024, amendments to the tax legislation, which the parliament approved in October, came into force. We are talking about law No. 4015-IX (previously – bill No. 11416-d)
Who are the payers of military tax
- individuals – residents who receive income from both a source of their origin in Ukraine and foreign income;
- individuals – non-residents receiving income from a source of origin in Ukraine;
- tax agents of individuals paying the fee for them and on their behalf from salaries, income under civil law contracts (CLC) and other income (as in the case of personal income tax).
The object of taxation of the military fee is the total monthly or annual income.
Will taxes be assessed retroactively?
Some experts stated that there is a conflict in the law and the increased rate of military tax will be applied to salaries retroactively. But the tax service assures: military tax will be withheld from November salaries at a rate of 1.5% regardless of the actual payment in December.
Since the law comes into force on December 1, taxes will not be assessed “retroactively”. According to Maryana Kavin, in the near future the Verkhovna Rada will adopt amendments to the law that will eliminate this conflict and harmonize the work of all regulations, including for sole proprietors.
What sole proprietors need to know
Kavin recalled the explanation of MP Danylo Getmantsev:
- For sole proprietors, the military tax will come into effect on January 1, 2025.
If the Verkhovna Rada votes for the amendment, then:
- Group 2 sole proprietors will pay the January military tax for the first time until January 19, 2025.
- Group 3 sole proprietors will pay the military tax for the first quarter for the first time until May 19, 2025.
Who may not pay the military tax
During martial law, the military tax is not collected from employees of:
- law enforcement agencies;
- Armed Forces of Ukraine;
- National Guard;
- SBU;
- Foreign Intelligence Service of Ukraine;
- State Border Service;
- State Security;
- Ministry of Internal Affairs;
- State Special Communications.
At the same time, the fee is not charged only from income categories that relate to cash security.
The military fee at a rate of 1.5% remains for military personnel and employees of the Armed Forces of Ukraine, the SBU, the SZRU, the Main Intelligence Directorate of the Ministry of Defense, the State Border Service of Ukraine, the State Service for Special Communications and Information Protection of Ukraine, the State Special Service of Transport of the National Guard, and the UGO of Ukraine.
What income is subject to military tax?
- salary;
- bonuses;
- compensation;
- sick leave;
- remuneration under centralized stock exchange contracts;
- profit from property rental;
- social payments;
- income from copyright;
- royalties;
- pensions;
- remuneration and prizes;
- dividends;
- inheritance;
- profit from cryptocurrencies;
- gifts.
Exceptions for individuals:
- maternity benefits;
- inheritance and gifts from first-degree relatives;
- sale of a vehicle (up to one transaction per year);
- alimony;
- housing subsidies;
- financial resources subject to return;
- funds received for travel expenses;
- profit from the sale of property that was inherited or owned for more than three years (no more than one transaction per year).
Also, gifts that are not valuable, i.e. the cost of which does not exceed 25% of the minimum wage, are not subject to military tax.
Maryana Kavin explains that in order to better understand what the military tax should be paid from, you need to ask the question: is there personal income tax? If there is, then there will be a military tax. (Personal income tax, as the name suggests, is a tax on any income of residents of Ukraine, which they receive both in Ukraine and abroad).
What is the military tax rate?
- For taxpayers – individuals, sole proprietors on the general taxation system (GTS), the rate is 5% of the taxable object.
- For sole proprietors on the simplified taxation system (STS), the rate is 10% of the minimum wage established by law on January 1 of the tax (reporting) year per calendar month.
- For sole proprietors and legal entities on STS group 3 – 1 percent of income determined under Article 292 of this Code.
“You need to remember this: both sole proprietors and legal entities that are in group 3 pay an additional one percent to the 5 or 3 that they already pay. But there will be two separate payments and invoices,” says Kavin.
Military tax for residents of “Diya City”
“At the time of recording the video, there were no exceptions for residents of “Diya City”. Both hired workers and gig specialists under contract – military tax of 5%. Yes, they were promised that taxes would not change for 25 years. But war is force majeure,” the expert says.
How single tax payers report on military tax
“The law stipulates that there will be no separate declaration on military tax. This means that in a year, changes will be made to the declaration on the single tax for all groups. And there will be a separate cell – military tax. There will not even be a need to indicate the amount of the object,” Kavin explains.
Responsibility for non-payment of military tax
The liability for sole proprietors and South Ossetians on the simplified system is the same as for failure to pay a single tax. This means that for failure to pay, groups 1 and 2 pay 50% of the single tax rate chosen by the single tax payer.
“That is, UAH 800 is the monthly amount, and UAH 400 is the fine,” the expert explained.
For group 3:
- In case of delay of up to 30 calendar days inclusive following the last day of the payment deadline for the amount of the monetary obligation – in the amount of 5% of the repaid amount of the tax debt.
- In case of delay of more than 30 calendar days – in the amount of 10% of the repaid amount of the tax debt.
Let us recall that on November 28, President Zelensky signed the law adopted by the Verkhovna Rada on increasing taxes and military levies. The main thing in the law is to increase the military tax on all incomes of Ukrainians from 1.5% to 5% this year and 2025.
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