Ukraine's Cabinet Approves New Tax Measures Affecting Drivers, Entrepreneurs, and Online Shoppers

New Legislative Proposals from Ukraine's Cabinet of Ministers

According to ХВИЛЯ: The Ukrainian government has approved three draft laws to modify the country's tax code. These initiatives will now be sent to the Verkhovna Rada, Ukraine's parliament, for further consideration. The first proposal introduces taxation on income earned through digital platforms. The second draft law concerns a military levy for private entrepreneurs (FOPs), while the third eliminates tax exemptions for international parcels. These changes are part of broader fiscal adjustments as the country continues to manage its wartime economy.

Key Provisions of the Draft Laws

Under the first proposal, companies providing services via digital platforms like Uklon, Bolt, Uber, Glovo, and OLX may become tax agents. They would withhold 10% from their partners' income, comprising a 5% personal income tax and a 5% military levy. Notably, this tax will not be applied if the partner's annual income does not exceed the equivalent of 2,000 euros and the number of transactions is fewer than 30 per year.

• The second draft law proposes setting the military levy for private entrepreneurs (FOPs) at a rate of 5%. This levy is planned to remain in effect during the period of martial law and for three years after its termination.
• The third draft law abolishes the duty-free allowance for parcels valued up to 150 euros. Customs will now impose duties on shipments worth less than 45 euros if they contain excisable goods, perfumes over 50 grams, eau de toilette over 0.25 liters, or coffee from 500 grams or tea from 100 grams.

Finance Minister Serhiy Marchenko stated that a separate draft law concerning value-added tax (VAT) for a segment of FOPs is currently in the stage of coordination and finalization.

“The draft law on VAT for a segment of FOPs is currently in the stage of coordination and finalization and will be submitted for approval in the very near future,” the minister noted.

The fate of all these initiatives depends on a vote by deputies in the Verkhovna Rada.

The approval of these drafts signals the government's attempt to adapt the tax system to new economic realities, particularly under wartime conditions and the growing use of digital platforms. The implementation of these new taxes and levies could significantly impact entrepreneurs operating in these sectors, as well as consumers who receive international shipments. The subsequent review by parliament will determine their final form and implementation timeline.

In light of these recent developments, it is essential to consider the broader implications of the proposed tax reforms. For instance, the Finance Ministry's sweeping tax reform aims to address similar concerns for entrepreneurs and online shoppers, potentially reshaping the financial landscape for these groups. Understanding these changes may provide further insights into the ongoing fiscal adjustments in Ukraine.