Ukraine introduces a levy on large enterprises and on individuals in order to fund its defense needs.

On 31 July 2014, Verkhovna Rada  (Parliament) of Ukraine adopted  the Law “On Amendments to the Tax Code of Ukraine and Other Legislative Acts of Ukraine” (hereinafter - the "New Law").

What the New Law says

The New Law, among other legislative updates, introduces a new tax which is designed to raise additional money for Ukrainian defense needs (hereinafter - the "Defense Tax"). The measure is set to last until 1 January 2015.

According to the New Law, the Defense Tax will be established at the rate of 1.5 percent and will apply only to the income of individual taxpayers in the form of salary payments, other earnings under civil and labour contracts, prizes and winnings.

Additionally, on 24 July 2014, the Verkhovna Rada  has also registered  the Draft Law “On Amendments to the Tax Code of Ukraine Regarding Tax on the Gross Income of Large Enterprises to Ensure the Defense Capacity of Ukraine” (hereinafter - the "Draft Law") that proposes introducing  the Defense Tax for large enterprises.

According to the Draft Law, the Defense Tax would be established at 0.25 percent of the received gross income of a legal entity if the following two criteria are met simultaneously:

  • more than 250 people are employed by the legal entity  
  • the annual income of the legal entity exceeds EUR50 million

The legal entity registered as a payer of the Defense Tax would be subject to monthly reporting and payment obligations.