Ukraine's Finance Ministry Proposes Keeping 5% Military Levy Post-War in New Tax Code

Ukraine's New Draft Tax Code

According to ХВИЛЯ: The Ukrainian Ministry of Finance has drafted a new tax code that proposes maintaining the current 5% military levy not only during the ongoing martial law but also after the war concludes. This proposed legislation, which aims to modernize the country's fiscal system, also introduces other significant amendments. These include mandating the public disclosure of information on high-risk VAT-paying businesses, requiring large taxpayers and excise duty payers to correspond with tax authorities exclusively via electronic means, and refining the legal definition of self-employed individuals.

Key Provisions of the Draft Law

Specifically, the draft law would make data on high-risk VAT-registered enterprises publicly available. Furthermore, it mandates a compulsory shift to electronic correspondence with the tax service for large taxpayers and excise tax payers. The document also clarifies the status of self-employed persons, a category that will encompass private entrepreneurs and individuals in independent professional occupations, such as lawyers and notaries. The government plans to apply the existing VAT registration threshold of UAH 4 million to these self-employed individuals.

For the draft to become law, it must undergo government review, pass two readings in Ukraine's Verkhovna Rada (parliament), and receive the president's signature. If approved, the new rules are scheduled to take effect on January 1, 2027. As noted by Bohdan Yankiv,

"Considering how fast everything is moving in the world right now, the time when this martial law will be canceled is completely unknown. Therefore, this 5% military levy is not the most controversial provision they want to change in this major tax law."

The proposal to extend the 5% military levy underscores the state's effort to stabilize public finances amid a protracted war and its aftermath. This special levy was introduced to fund defense needs, and its potential continuation signals long-term fiscal planning. The push for greater transparency by publishing data on risky businesses is intended to curb tax evasion, while the updated regulations for the self-employed could simplify business conditions for sole proprietors, potentially boosting economic activity in the country.

In light of the proposed tax reforms, including the military levy extension, it's essential for entrepreneurs and consumers to stay informed about the broader implications of these changes. For a detailed overview of how this new tax legislation could affect business operations and online shopping in Ukraine, check out our coverage on sweeping tax reform initiatives.