On September 18, 2014 the State Fiscal Service of Ukraine explained13 why severance pays shall be subject to military duty. According to the Tax Code of Ukraine, military duty shall be charged inter alia on other payments and fees accrued (paid, provided) to a taxpayer due to employment relations.
Severance pay is a cash payment to an employee dismissed through no fault of his/hers, which shall be paid by his/her employer on grounds and in amounts established by Article 44 of the Labor Code of Ukraine.
The severance pay amount is a mandatory payment to an employee due to termination of employment and shall not be subject to military duty on a common basis.
As for expenses of a company paying military duty, they should be included into that company’s costs and expenses according to Par. 142.2 of the Tax Code of Ukraine as mandatory payments provided to employees expenses according to Par. 14 in cases stipulated by the law.