Finance Committee of the Verkhovna Rada Supports Bill Extending Military Tax for Three Years After Martial Law Ends

The Finance, Taxation, and Customs Policy Committee of the Verkhovna Rada of Ukraine has made a significant decision regarding the continuation of the military tax. During a session held on Monday, April 6, the committee recommended the adoption of Bill No. 15110, which proposes that the military tax will remain in effect for three years following the end of martial law in Ukraine. This information was shared by Member of Parliament Yaroslav Zheleznyak, who represents the 'Golos' faction.

According to Zheleznyak, 16 committee members supported this decision, while three abstained from voting. He also noted that a separate special fund would be established in the Budget Code, into which funds from this tax would be deposited. He stated that the targeted use of these funds would be directed towards the needs of the army. However, the MP expressed doubts about the appropriateness of this step, labeling it as a 'purely political story' and 'shuffling money from one pocket to another.'

According to the explanatory note to Bill No. 15110, the military tax will be applied to individuals at a rate of 5%, while for individual entrepreneurs (FOPs) who are single tax payers of the 1st, 2nd, and 4th groups, it will amount to 10%. This tax will be calculated based on one minimum wage on the first day of the current month, which in 2026 will amount to 850 UAH. For third group single tax payers (both FOPs and legal entities, excluding electronic residents), the military tax will be set at 1% of income. All these provisions will remain in effect for three years following the year in which martial law is lifted or canceled on the territory of Ukraine.

It is worth noting that three structural benchmarks that Ukraine was supposed to meet by the end of March 2026 under the Extended Fund Facility (EFF) program of the International Monetary Fund (IMF) have not been fulfilled. This is confirmed by data published on the website of the RRR4U consortium. By the end of March, the Verkhovna Rada was expected to pass a series of tax changes concerning the cancellation of VAT exemptions for the simplified taxation system, taxation of digital platforms, taxation of all parcels, and the permanent enforcement of the military tax.

Although the Cabinet of Ministers approved and submitted three bills concerning the taxation of digital platforms, taxation of all parcels, and the permanent enforcement of the military tax on March 30, one bill related to VAT for FOPs remains under revision. This indicates that the Ukrainian government is attempting to find ways to ensure financial stability and meet the demands of international creditors; however, some issues remain unresolved.