Date of publication: 12 January 2025
Ivan Maryniuk, Head of Tax Law Practice
Source: NV Business
In the third year of the grueling war, Ukraine continues to experience significant economic adjustments. With a historic tax increase at the end of 2024, tax legislation remains one of the most dynamic areas. The Law on the State Budget for 2025 has been adopted as well, which sets specific benchmarks for businesses.
Minimum wage and minimum subsistence wage
From 1 January 2025, the minimum wage and minimum subsistence minimum (used for calculating benefits, taxes, activity thresholds, license fees, financial penalties, and court fees, etc.) will remain the same: the minimum wage is UAH 8,000, the subsistence minimum is UAH 3,028. From an economic perspective, this means that some indicators of the cost of doing business will remain the same as in 2024.
Tax burden minimum
An employee’s minimum salary (UAH 8,000) is withheld from the following: personal income tax (18%) – UAH 1,440, military levy (5%) – UAH 400, and self-pay social tax (22%) – UAH 1,760. Thus, the minimum tax burden per employee will be UAH 3,600 or 45%. This corresponds to the level of tax burden in some EU countries.
Entrepreneurs’ limitations on simplified taxation and military levy
The income limits for 2025 are set based on the minimum wage as of January 1, 2025 and do not change throughout the year. Group 1 – UAH 1,336,000 (167 times the minimum wage); Group 2 – UAH 6,672,000 (834 times the minimum wage); Group 3 – UAH 9,336,000 (1167 times the minimum wage).). Likewise, the military levy for individual entrepreneurs will be introduced on 01 January 2025 in the following amounts: group 1 and 2 – 800 UAH (10% of the minimum wage as of January of the current year), paid monthly in advance payments; group 3 – 1% of income, paid quarterly. According to the principle of single tax under payment, individual entrepreneurs in Groups 1 and 2 are required to pay the military levy regardless of whether they earned income during the reporting period.
Bringing back unified social contributions for entrepreneurs
In 2025, the military exemption for paying unified social contributions will end for individual entrepreneurs (for themselves). A unified social contribution of UAH 1,760 will be required of them. In addition, the maximum base for charging the unified social contribution will be UAH 160,000 (20 minimum wages).
Monthly reports on personal income tax, military levy and unified social contribution
As of January 1, new rules will govern the monthly reporting of personal income tax (PIT), military levy (ML), and unified social contribution (USC). Individual entrepreneurs are expected to receive updated reporting forms from the Ministry of Finance, while the State Tax Service of Ukraine will prepare corresponding electronic formats. These formats will include detailed information on military levy payment.
Licensing of alcoholic beverages and tobacco products
On January 1, the Law of Ukraine “On State Regulation of Production and Turnover of Ethyl Alcohol, Alcohol Distillates, Alcoholic Beverages, Tobacco Products, Liquids Used in Electronic Cigarettes, and Fuel” dated 19 December 1995 No. 481/95-VR will be repealed. Regulation of these activities and licensing will now be governed by Law No. 3817-IX, which was passed on 18 June 2024.
Tax relatedness criterion changes
Starting January 1, amendments to the Tax Code of Ukraine will revise the criteria for determining relatedness of persons, in particular: the conditions of economic dependence between residents and non-residents have been clarified (persons will be considered related if the income/cost of purchased products of a resident is 75% or more, provided that such income/cost of purchased products is 50% or more of the total amount of income of such legal entity from the sale of products/total cost of purchased products); the threshold of ownership of corporate rights has been increased.
Defense-related tax and customs exemptions
For specific goods critical to defence needs, tax and customs exemptions will be extended in 2025. A number of these items include materials for making projectiles and ammunition, unmanned systems on land, in the air, and on water, active counterintelligence measures, mechanized demining machines, and remote control weapons and ammunition (used by unmanned systems). This initiative is part of Draft Law No. 12266 dated 29 November 2024, which amends the Tax Code of Ukraine and is currently awaiting the President’s signature.
Restoration of tax audits
Starting in 2025, all taxpayers will be subject to tax audits (scheduled and unscheduled), with the exception of those whose tax address is in temporarily occupied territories or areas of active hostilities. This signals a return to pre-war audit procedures. Businesses should ensure that their tax reporting is accurate and timely. Additionally, they should verify the availability and accuracy of primary documents to support income and expense records.
