New tax rates and reporting will be in effect from the new year.
President of Ukraine Volodymyr Zelensky signed a law deferring the increase in taxes for individual entrepreneurs (SPs) until January 1, 2025.
How many taxes will entrepreneurs have to pay in the new year – read the material on TSN.ua.
“Historical changes” for SPs
Zelensky signed the law on the historic tax increase on November 28, and it came into force the following day. The main changes concerned the military tax rate, the profit tax for banks, and the introduction of monthly reporting.
On Wednesday, December 25, Zelensky signed a law regulating the tax payment standards after their historic increase. It postpones the introduction of new tax changes for sole proprietors until January 1, 2025, instead of the previously planned October 1, 2024.
Chairman of the Parliamentary Committee on Finance, Tax and Customs Policy Daniil Getmantsev also confirmed this in his Telegram channel:
“Bill 9319 has been signed. The increase for sole proprietors comes into effect on January 1. Everything as promised,” he wrote.
Thus, the increased taxes for sole proprietors will come into effect on January 1, 2025.
In general, the law signed by the president today provides for:
- retroactive tax abolition;
- for single tax payers, the military tax will be introduced from January 1, 2025;
- for income based on the results of the annual declaration for 2024, a rate of 1.5% will be applied (except for property transactions completed in December 2024);
- provision of benefits for the military tax is provided for individual entrepreneurs in temporarily occupied territories, individual entrepreneurs of military personnel, individual entrepreneurs on sick leave and on vacation, similar to the single tax;
- the abolition of the military tax for e-residents is provided;
- the possibility of crediting the military tax paid by an individual entrepreneur to the minimum tax liability and other clarifying provisions.
Single tax and income limits and the unified social contribution
According to the Entrepreneurship Development Fund, the single tax rates and income limits for simplified tax system users will be:
First group: single tax rate – UAH 302.80 per month (10% of the subsistence minimum for able-bodied individuals).
Second group: single tax rate – UAH 1,600 per month (20% of the minimum wage).
Third group: Single tax rate – 5% of income (or 3% for VAT payers).
From January 1, 2025, sole proprietors are required to pay a single social contribution (SSC), since the benefit that allowed sole proprietors not to pay SSC during martial law is being cancelled.
The Chas News publication reports that the explanatory note to the draft budget for 2025, in order to additionally fill the budgets of social and pension funds, according to the Budget Declaration for 2025-2027, provides for “resumption of payment of a single social contribution by individuals, entrepreneurs who have chosen a simplified taxation system, individuals engaged in independent professional activities and members of farms.”
The minimum payment will be UAH 1,760 per month (22% of the minimum wage), and the maximum accrual base for the single social contribution: Temporarily increases to 20 minimum wages, that is, UAH 160,000, which sets the maximum monthly contribution at UAH 35,200.
The exception is sole proprietors located in temporarily occupied territories.
Military tax
Sole proprietors of the first, second and fourth groups will pay 800 hryvnia per month (10% of the minimum wage). Third group: 1% of income, the Entrepreneurship Development Fund reports.
It is worth noting that this rule will be in effect from January 1, 2025 until the end of the year in which martial law is lifted.
It is worth adding that from 2025, monthly reporting for sole proprietors on hired workers will be introduced instead of quarterly. Also, the reporting forms for the single tax will be updated, including information on the payment of military tax.
Taxes for sole proprietors of the third group
Individual entrepreneurs of the third group of the single tax pay several types of taxes. These include: single tax, unified social contribution and fee.
The single tax rate is 3 or 5% of the income amount for each quarter.
The level of the single tax rate may vary:
- if the individual entrepreneur is a taxpayer, then for the current year it is 3%.
- if the individual entrepreneur is not a VAT payer, then the rate is 5% of the income amount
Therefore, if a person chooses this type of tax, he must additionally register as a VAT payer.
Also, individual entrepreneurs must pay a single social contribution. It is 22% of the minimum wage. Since in 2024 the minimum wage in Ukraine is 8 thousand hryvnia, the single social contribution is 1,760 thousand hryvnia.
In addition, an individual entrepreneur of the third group for a single tax must also pay a military tax.
This occurs regardless of whether the individual entrepreneur is an employee or not. As an employee, an individual will pay 5% of the military tax, and as a sole proprietor of the third group of the single tax – 1% of income.
Recall that TSN.ua recently reported that sole proprietors are closing en masse after the law on increasing taxes came into force, but Danilo Getmantsev denies this.