Ukrainian Parliament Extends Military Tax for Three Years Post-War

The Verkhovna Rada of Ukraine has taken a significant step by extending the military tax for three years after the conclusion of the war, a decision that serves as a key structural benchmark for the new financing program from the International Monetary Fund (IMF). This resolution was passed during the voting on bill No. 15110, which received support from 257 members of parliament, as reported by Interfax Ukraine.

During the parliamentary session, Ukraine's Finance Minister Serhiy Marchenko presented the bill, emphasizing that the adoption of this legislation would enable the Ukrainian state budget to attract over 140 billion hryvnias within the three years following the year in which martial law is lifted or canceled. This underscores the importance of the military tax in financing state expenditures during the post-war period.

According to the explanatory note to bill No. 15110, the extension of the military tax pertains to provisions that were introduced during the period of martial law in Ukraine. Specifically, for individuals, the tax will be set at 5%, while for individual entrepreneurs (FOP) who are single tax payers in the first, second, and fourth groups, the rate will be 10% based on one minimum wage on the first day of the current month, which is projected to be 850 hryvnias in 2026. For third group single tax payers (FOP and legal entities, excluding electronic residents), the military tax will be 1% of their income.

Additionally, during the session, Deputy Yaroslav Zheleznyak reported that the second IMF bill No. 15111, which concerns the taxation of digital platforms, was not included in the agenda due to a lack of one vote. This issue has been postponed until the following day, indicating the parliament's active engagement in tax reform discussions.

It is noteworthy that four structural benchmarks that Ukraine was expected to meet by the end of March 2026 under the Extended Fund Facility (EFF) program of the IMF were deemed unmet. Among these were tax reforms related to the abolition of VAT exemptions for simplified tax payers, taxation of digital platforms, taxation of all parcels, and the continuation of the military tax.

On March 30, the Cabinet of Ministers of Ukraine approved a package of three bills aimed at amending the Tax Code, which were developed by the Ministry of Finance. Minister Marchenko highlighted that these changes include regulations on the taxation of income earned through digital platforms, taxation of international parcels starting from 0 euros, and the extension of the military tax following the end of martial law.

Marchenko also noted that the VAT bill for certain individual entrepreneurs is currently undergoing coordination and refinement with central executive authorities and will be presented for approval very soon. This reflects the government's proactive efforts to enhance the tax system in Ukraine.