Introduction of Military Tax in Ukraine

Ukraine/September 2014

Ukraine’s parliament has amended its tax law as to introduce a 1,5% military tax based on employees’ income as a means to improve the country’s Armed Forces. The said tax will be imposed temporarily and will be paid in addition to the personal income tax. State Authorities have already proceeded with the preparation of a draft report on military tax which should be submitted by tax agents on a quarterly basis.

Taxpayers are:

• Residents of Ukraine who receive income from sources in Ukraine;
• Nonresidents who receive income from sources in Ukraine;
• Ukrainian employers and other tax agents.

The tax base is not capped. The military tax is withheld from:

• employment related income including salary and benefits (financial aid is not subject to taxation);
• remuneration under civil agreement;
• winning from lotteries and gambling.

It was planned that the respective tax would not be applied until 01 January 2015. However, now it is expected that military tax will be applied also in 2015.

Maryna Shuliak
Eurofast Global, Kyiv office