The Cabinet of Ministers, after adopting the National Revenue Strategy until 2023, plans to teach Ukrainians to live off their own incomes - this will concern both businessmen and hired workers, as well as supervisory institutions.
More details about it tells "Forbes".
It should be noted that the adoption of the National Revenue Strategy (NRS) for the next few years until the end of 2023 was one of the IMF requirements to Ukraine before the further revision of the current financing program.
Thus, the simplified tax system (STS) is an effective solution for companies and individual entrepreneurs, allowing them to pay a single tax instead of the usual personal income tax, unified social tax and military levy. Now this system is used by approximately 1.7 million taxpayers. The total number of these participants leads to stable tax revenues of about 0.9% of GDP between 2020 and 2022. However, the system may start to be used by large businesses, while it was created to support small businesses.
STS reform in 2025-2027
During the three-year transition period, the flat tax rates for group 3 legal entities will be gradually increased to the standard income tax rate of 18%. The final levels and individual values of the rates will still be subject to discussion. The main objective of this initiative is to encourage legal entities to gradually and independently switch to the general tax system. After the end of the transition period, companies will be prohibited from using the simple tax system.
The second and third groups of STS for sole proprietors will be combined into one group. For it will create a differentiated scale of rates from the minimum 3% for trading activities to 17% for a number of services. This will also happen gradually. For taxpayers of this group, the use of cash registers will be mandatory.
The list of businesses that are allowed to participate in the first group will be revised to exclude high-margin businesses. The flat tax will be canceled and will be replaced by a rate calculated on the actual received income.
For individual farms (individuals), which will remain in the fourth group, the taxable base will be expanded starting from the year when land taxation based on mass valuation is introduced in Ukraine. For agricultural producers (legal entities), the single tax rates will be gradually increased over three years to the level of the standard income tax rate, which is 18%.
The exemptions that allow avoiding accounting and documenting the origin of goods upon sale will be repealed. Further, accounting requirements will be simplified to the maximum extent possible, but will remain mandatory regardless of the payer's legal form and/or type of activity.
Personal income tax
Personal income tax (PIT) in Ukraine is based on a flat rate of 18%, which was introduced in 2016. Now the government is considering the possibility of restoring the progressive scale, which previously included rates of 15% and 20%. The parameters of this scale for the future have not yet been specified, but they will be wider, providing for one or two significantly higher personal income tax rates for high-income individuals.
The minimum non-taxable income will be replaced by the provision of personal social assistance, and all personal income tax exemptions will be revised.
At the same time, the legislation will be amended, which will allow the controlling authorities to strengthen monitoring of individuals' income and expenses by accessing bank information on the movement of funds in their accounts.