The draft law on tax increases recently adopted by the Verkhovna Rada may cause some difficulties in paying the military fee. Andriy Shabelnikov, Chairman of the UNBA Committee on Investment and Privatization, Managing Partner of EvrikaLaw, told this in an exclusive commentary to UNN.
"First of all, it is worth noting that the final text of the draft law No. 11416-d has not been published. Therefore, it is difficult to say for sure whether this document is ready for use. However, based on the analysis of the latest version of the draft law No. 11416-d, we can say that the mechanism for paying the military fee enshrined in it is imperfect.
First of all, the question arises How do fops pay it and to what account? So far, it is expected that the account details of the Tax Service of Ukraine for paying the military fee will be changed. Therefore, entrepreneurs need to be careful not to make a mistake and correctly pay the increased rate of military duty.
Also, due to the introduction of a new tax for individual entrepreneurs, there is a need to change the declarations of single tax payers. Therefore, I think that in practice, there will be many problems with the payment of the military fee and this mechanism will still be finalized," the lawyer believes.
Also, certain difficulties with the calculation of the military fee may arise if the law comes into force in the middle of the month. The lawyer hopes that the final version of the document approved by the Verkhovna Rada will contain clarifications in this regard.
The lawyer also believes that it is not logical to extend the military fee to E-residents.
"We remember that E-residents are foreigners who are not tax residents of Ukraine, so including them in the list of military duty payers is really not logical," Shabelnikov said.
In general, the lawyer believes that the adopted changes will cause a significant tax burden on both entrepreneurs and citizens.
"Of course, the implementation of this law will create a significant tax burden on both businesses and ordinary citizens. In turn, this will create difficulties for the functioning of Ukraine's economy," Shabelnikov said.
Сontext
On October 10, the Parliament approved the draft law on amendments to the Tax Code of Ukraine regarding taxation during martial law, initiated by the head of the Verkhovna Rada Finance Committee Danylo Hetmantsev and MPs Oleksandr Lukashev and Andriy Motovylovets.
According to the chairman of the subcommittee on Value-Added Tax, MP Alexey Leonov, this is a temporary decision that will be valid for the period until December 31 of the year in which martial law will be ended, and provides for:
- Increase in the military levy on personal income (wages, dividends, additional benefits, etc.) from 1.5% to 5%;
- Sole proprietors on a single tax of Groups 1, 2 and 4 are required to pay a monthly military fee of 10% of the minimum wage;
- for single tax payers of the third group, the military levy rate of 1% of income is set;
- Introduction of income taxes for the financial sector. The corporate income tax rate for banks in 2024 will be 50%. For non-bank financial institutions (except for insurers), the corporate income tax rate will be 25%. They will be taxed from January 1, 2025.
Other important innovations include monthly PIT reporting. This, as explained, is necessary for the introduction of an economical booking mechanism. There is also an exemption from taxation of income received under the "Made in Ukraine" program, i.e. cashback will be exempt from taxation.
At the same time, deputy chairman of the Finance Committee , MP Yaroslav Zheleznyak saidthat during the voting for the bill, people's deputies "knocked down" Amendment No. 988. knocking down this amendment means the introduction of the following norms::
- The military tax for all but the simplified taxpayers will be raised from the day the law comes into force, not from October 1;
- The tax rate for sole proprietors of the simplified taxation system will still be effective from October 1;
- there are no postponements of the January 1 tax-free period for anyone;
- e-residents also fall under the military levy.
It is worth noting that the "shot down" amendment provided that sole proprietors located in the occupied territories were exempt from paying the military fee. It was also envisaged that sole proprietors who do not use the labor of employees are exempt from paying the military fee for one calendar month per year for the duration of their vacation, as well as for the period of illness confirmed by a sick leave certificate if it lasts 30 or more calendar days.
The amendment also provided for a deferral of the military fee for the first month in which the law came into force and the non-application of fines for non-payment for October.
It was also envisaged that the 5% rate would not be applied to income subject to annual declaration based on the results of 2024.
In addition, it was assumed that the military levy for fops is established temporarily and canceled with the end of martial law (namely, on December 31 of the year when martial law is lifted).
Zheleznyak emphasized that the "knocking down" of the amendment would raise a lot of practical issues in implementing the law.
But so far, the final version of the adopted bill has not been made public, and 4 resolutions have already been registered in the Verkhovna Rada to cancel the adoption of this document. At the time of writing, only one of the resolutions was published on the parliament's website. From the explanatory note, it follows that the adoption of the bill, according to the initiators of the resolution, occurred in violation of the requirements of the Verkhovna Rada regulations – the bill developed for the second reading and accompanying documents to it were provided to people's deputies less than 10 days before the voting day. People's deputies believe that this way they and their colleagues were deprived of the opportunity to study and analyze the documents in detail.
"In addition, the consideration and adoption of the draft law took place despite the negative opinion of the Main Legal Department of the Verkhovna Rada of Ukraine, and therefore the adopted law cannot be considered adopted in accordance with the law and the decision to adopt it is subject to cancellation in the manner prescribed by the Law of Ukraine "On the Rules of Procedure of the Verkhovna Rada of Ukraine" (Article 48 of the Rules of Procedure)," the explanatory note to the draft resolution says.
The conclusion of the main legal department of the Verkhovna Rada regarding the draft law on raising taxes, which was prepared for the second reading, does contain a number of negative comments. Interestingly, even the legal department itself indicates that it analyzed the document in an extremely short time. In general, the conclusions indicate that the document does not comply with the principle of equality of all taxpayers before the law, eliminates the constitutional value of the hryvnia as a monetary unit of Ukraine, and a number of its provisions do not take into account the rule of law. In addition, the contradiction in the issue of taxation of personal income is pointed out. We are talking about the fact that the draft law does not provide for exceptions established by the current version of the tax code, regarding the exemption from taxation of income in the form of monetary security, in particular, military personnel of the Armed Forces of Ukraine for the period of direct participation in the confrontation with the Russian Federation. There were also comments on the contradictions between the entry into force of the law and the introduction of its individual norms, regarding the calculation of the amount of the minimum tax liability in terms of land payment.
Currently, the signing of the adopted draft law by the Speaker of the Verkhovna Rada is blocked by resolutions submitted to the parliament - only after their consideration and rejection will the Speaker of the Parliament be able to visa the document and submit it to the President of Ukraine for signature. It is likely that the draft resolutions submitted to the parliament will be considered at one of the next plenary sessions of the parliament.