Tax Increase Law: Zelensky Approves New Changes for Wartime Budget

On November 28, Ukrainian President Volodymyr Zelensky signed a law amending the Tax Code, introducing new rules for taxation under martial law. This step has sparked heated debate among politicians and economists, as it provides for a significant increase in taxes for many categories of taxpayers.

The adoption of the document was reported on the Verkhovna Rada website. MP Yaroslav Zheleznyak noted in his post that the president’s signing of the law was delayed by 44 days, which, according to him, cost the state budget about 12 billion hryvnias. Zheleznyak estimated that each day without the law in effect cost the budget more than 270 million hryvnias, which could have been used to meet the needs of the army.

The law will enter into force on November 30, after its official publication. It is a revised version of the government bill No. 11416-d, which the Verkhovna Rada adopted in the first reading on September 17, and in the second reading on October 10. During the preparation for the final vote, more than 1,300 amendments were submitted to the document. Among them, in particular, the abolition of the obligation of notaries to act as tax agents when certifying purchase and sale agreements between individuals was taken into account.

The main provisions of the law provide for an increase in the military levy from 1.5% to 5% and its introduction for individual entrepreneurs (IEPs). Tax rates have also been increased for IEPs of the first and second groups, and a single tax of 1% of income has been introduced for IEPs of the third group. In addition, financial institutions will pay 25% of income tax, and banks - 50%.

Other changes include an increase in the minimum tax liability (MTL) for land, an increase in the rent for the extraction of crushed stone, the introduction of advance payments for gas stations (GASs) and mandatory monthly reporting on personal income tax (PIT) from 2025. The law also exempts from taxation the amount of cashback received by consumers.

These innovations are aimed at increasing budget revenues by 58 billion hryvnias in 2024 and by 137 billion hryvnias in 2025. The government believes that the additional funds will be directed to financing military needs, infrastructure projects and social programs. However, experts warn that the increased tax burden could create risks for small and medium-sized businesses, which are already operating in conditions of economic instability.