New taxes for FOPs from 2025: what will change and who will be affected

From January 1, 2025, taxes will increase for sole proprietorships and natural persons: what is known about itOn December 1, 2024, a law known as the “resource” tax increase law came into force in Ukraine, which has a significant impact on sole proprietorships and legal entities operating on the simplified taxation system.

The law was signed by President Volodymyr Zelensky after numerous adjustments, and its publication was delayed for several days. The main innovation was an increase in the military levy rate and the introduction of new taxation rules for certain groups of taxpayers.

Notifies UNN with reference to the Ministry of Finance of Ukraine.

Details

As already reported, the President of Ukraine, Volodymyr Zelenskyi, signed Law No. 11416-d on the “historic” increase in taxes, which is also called “resource”. According to People’s Deputy Yaroslav Zheleznyak, the law was planned to be published on November 30, in order for it to come into effect on December 1.

However, already on November 29, information appeared that the publication of the law on tax increases was withdrawn. And it was published on November 30, and accordingly it came into force on December 1.

The draft law No. 9319 on taxation of fees for gig contracts for residents of “Diya City” was supported by the Council in the second reading. 268 People’s Deputies voted “for”.

It was in it that there was an amendment that corrected the tax bill 11416d and the “backdate” where taxes are transferred from October 1 to January 1, 2025 for FOPs

On December 3, the Verkhovna Rada Committee on Finance, Tax and Customs Policy made an amendment to the draft law “On Amendments to the Tax Code of Ukraine and Some Other Legislative Acts on Stimulating the Development of the Digital Economy in Ukraine”, according to which new taxation will also be imposed on the third group of FOPs to operate from January 1, 2025.

What does the Law provide?

For FOPs of the first, second and fourth groups, the military tax rate will be 10% of the minimum wage, which at the beginning of 2025 is set at the level of UAH 8,000. This means that the amount of military duty for such FOPs will be UAH 800 per month. The changes apply to the payment of this fee starting from January 1, 2025.

Payers of the single tax of the third group, both natural persons-entrepreneurs and legal entities, will have to pay a military levy in the amount of 1% of their turnover, and the first payments will be made at the end of the first quarter of 2025.

Also, the levying of the military levy will not take place “retroactively”. That is, individuals will not be forced to pay an additional levy for 2024, and their total annual income for 2024 will be taxed with a military levy at the rate of 1.5%.

However, some income, in particular from transactions with property, as well as income in the form of the value of property inherited or received as a gift, will be taxed with a military levy at the rate of 5% from December 1, 2024.

From January 1, 2025, the military tax rate for all incomes of individuals, which will be indicated in the annual declaration, will increase to 5%.

Significant changes also concern the taxation of domestic government bonds (OVDP), in particular military bonds. They will continue to be exempt from personal income tax (PIT) and military duty.

Social benefits, pensions, scholarships and other incomes that are not subject to personal income tax will also not be subject to military duty.

It is worth noting that for military personnel and employees of law enforcement agencies, the rate of military tax will remain at the level of 1.5%, as provided by legislation for this category of persons.

Since the beginning of the full-scale invasion of the Russian Federation into Ukraine, the state budget has actually been divided into two main parts – military and social-humanitarian.

All military expenditures, which in 2025 will reach UAH 2.23 trillion or 26.3% of GDP, are financed by internal revenues and borrowing.

We will remind

After the signing of the law on increasing taxes, there has been a mass closure of FOPs in Ukraine. More than 1,000 businesses close every day, well above the usual rate of 700 closures.