55% of companies will not be able to compensate employees for the increase in military duty - survey
Kyiv • UNN
According to the EBA survey, 55% of companies will not be able to compensate employees for the increase in the military tax. An increase in the tax burden will force 56% of companies to cut costs and 11% to partially reduce their business.
If the military tax in Ukraine is increased to 3% or 5% , more than half of companies will not be able to compensate their employees for this difference. Also, more than half of the companies will have to cut other important expenses. These are the results of an express survey conducted by the European Business Association, UNN reports.
Details
Reportedly, member companies have been surveyed regarding the potential increase in the tax burden on employers. The changes may come into force if the draft laws No. 11416-d on the peculiarities of taxation during martial law and No. 12000 on the State Budget of Ukraine for 2025 are adopted.
Thus, if the military fee is increased to 3% or 5%, slightly more than half, namely 55% of the survey participants, said they would not be able to compensate their employees for this difference. Accordingly, this will lead to a decrease in people's real income
If the military tax increases to 3%, 15% of companies are reportedly ready to fully compensate for the difference in the next salary review, and 14% are ready to partially compensate. The remaining 7% are considering full compensation by introducing a surcharge by the end of the year when martial law is lifted.
If the military tax is increased to 5%, slightly fewer companies are ready to fully compensate for the decline in real income of employees - 14%, and 13% are partially ready to compensate. And 6% are ready to fully compensate with a surcharge until the end of the year in which martial law is lifted. Other companies are considering different approaches to compensation or have not yet made a decision.
58% of the surveyed companies say that an increase in the unified social tax base of 22% from 15 to 20 minimum wages (applicable to salaries up to UAH 160 thousand) will significantly affect their expenses.
"In general, an increase in the tax burden - a potential increase in VAT, military duty, and unified social tax - will force 56% of the surveyed companies to cut other expenses important for the company's operation. For 11% of companies, such an increase may lead to a partial reduction in production or business," the EBA said.
It is noted that business is also very wary of the idea of raising the VAT rate, as this step may, instead of fighting the shadow economy, stimulate smuggling and illegal trade.
As an alternative to a total VAT increase, the business community supports the proposal to impose a VAT on imports of goods up to EUR 500 in accompanied baggage and up to EUR 150 for postal and express shipments, which are currently exempt from taxation.
For reference
The express survey was conducted from October 1 to 3, 2024 among the EBA member companies. The survey included 71 companies from various industries. Among the participants, international companies accounted for 79%, Ukrainian companies for 21%; 48% were large enterprises, 44% were medium-sized, and 8% were small.
