Ukraine's Rada passes bill to raise military levy from 1.5% to 5%, several other taxes

MOSCOW. Oct 10 (Interfax) - Ukraine's Verkhovna Rada has adopted as a whole a bill amending the Ukrainian Tax Code regarding peculiarities of taxation under martial law, which envisions raising the military levy from 1.5% to 5% from October 1 this year, the profit tax for banks to 50% for 2024 and increasing a number of other taxes and levies, Ukrainian media reported, referring to a livestream of the parliamentary session.

The regulation that a higher military levy does not apply to the salaries of service members was adopted at the parliamentary hearing.

As reported, along with the higher military levy for hired employees, the bill also envisioned its introduction for individual entrepreneurs in the amount of 1% of turnover for the third group and 10% of the minimum wage (currently UAH 800) for the first, second and fourth groups, an increase to 50% of the profit tax for banks for the entire 2024 and an increase from 18% to 25% of the profit tax for financial institutions (except insurers) starting from 2025.

Other new regulations include the introduction of advance contributions on the profits of filling stations, linking the advance contribution rate for the currency exchange offices to the euro, increasing the minimum tax liability for agricultural land and raising the rent on crushed stone mining, increasing the minimum wholesale and retail prices of alcoholic beverages by 50%, but at the same time, exempting the funds obtained by individuals under the national cashback program from taxation.

In addition, a regulation on the transition from quarterly to monthly reporting of personal income tax will be introduced on January 1, 2025.

Former Ukrainian President, and now MP and leader of the European Solidarity party Petro Poroshenko is convinced that the adoption of the bill increasing the military levy will result in lower living standards of hired workers and affect the Ukrainian economy, while not assisting the Ukrainian Armed Forces, Ukrainian media quoted him as saying on the party's website.

"Without the funding generated by the Ukrainian economy and business entities, it is impossible to keep up the army [...]. In total, 55% of Ukrainian businesses said that they are unable to compensate for the increase in the military levy, and this definitely results in the impoverishment of hired workers. Not only nurses, orderlies, cleaners, the poorest, from whose pockets you are going to take money out, but all hired workers," Poroshenko said in a speech from the rostrum of the Verkhovna Rada on Thursday.

This bill "creates a desert instead of creating a business climate," he said. Poroshenko also said that the collection of taxes retroactively from October 1 violates the Ukrainian constitution and urged to put a stop to the decision to raise the military levy.