Military duty in 2025: new rules for single tax payers

On January 1, 2025, changes to the legislation regarding the military duty for individual entrepreneurs (IEs) under the simplified taxation system came into force in Ukraine. These innovations are set forth in Law of Ukraine No. 4113 and concern both the rates of the fee and the procedure for its payment. Let us consider the …

Get a consultation

On January 1, 2025, changes to the legislation regarding the military duty for individual entrepreneurs (IEs) under the simplified taxation system came into force in Ukraine. These innovations are set forth in Law of Ukraine No. 4113 and concern both the rates of the fee and the procedure for its payment. Let us consider the main aspects.

What will change for sole proprietors on the single tax?

  1. Military duty rates:
  • For sole proprietors of the first, second and fourth groups, the military tax rate is set at 10% of the minimum wage as of January 1, 2025. Since the minimum wage is UAH 8000, the monthly military fee will be equal to UAH 800.
  • For individual entrepreneurs of the third group (both individuals and legal entities), the rate will be 1% of their income.

 

  1. Terms of payment:
  • Individual entrepreneurs of the first, second, and fourth groups pay the military fee in advance on a monthly basis by the 20th day of the current month. It is also possible to make an advance payment for the entire reporting period (quarter or year).
  • For the third group, payment of the military fee is made within 10 calendar days after the deadline for submitting the declaration for the reporting quarter.

 

  1. Total tax burden for individual entrepreneurs.

In 2025, the total amount of tax liabilities will increase:

  • The first group:
  • SINGLE SOCIAL CONTRIBUTION: UAH 1760 × 12 months = UAH 21,120.
  • Single tax: UAH 302.8 × 12 months = UAH 3,633.60.
  • Military fee: UAH 800 × 12 months = UAH 9,600.
  • Total: UAH 34,353.60 per year.

 

  • The second group:
  • SINGLE SOCIAL CONTRIBUTION: UAH 21,120.
  • Single tax: UAH 1,600 × 12 months = UAH 19,200.
  • Military fee: UAH 9,600.
  • Total: UAH 49,920 per year.

Benefits for certain categories of taxpayers

  1. Individual entrepreneurs from the territories of hostilities and occupation:
  • Entrepreneurs of the first and second groups, whose tax address is located in the territories of hostilities or temporarily occupied territories, may be exempt from paying the military tax for the period of active hostilities or occupation. They are also not required to file tax returns for this period.

 

  1. Benefits for mobilized individual entrepreneurs:
  • Sole proprietors on military service are exempt from paying military duty, single tax and unified social contribution for the entire period of service.

 

  1. Benefits for sole proprietors during sick leave or vacation:
  • Entrepreneurs of the first and second groups who do not have employees are exempt from paying the fee during vacation (up to 1 month per year) or during an illness that lasts more than 30 days.

Penalties for violations

Fines are imposed for non-payment or late payment of the military fee:

  • For a delay of up to 30 days – 5% of the unpaid amount.
  • For a delay of more than 30 days – 10%.
  • In addition, a penalty is charged for each day of delay.

For taxpayers of the first and second groups who fail to pay the advance payment on time, the penalty is 50% of the monthly fee (UAH 400 in 2025).

Features for the third group

In addition to the simplified taxation system, sole proprietors of the third group now have an additional obligation to pay a military fee of 1% of their income. This payment is made after submitting a quarterly declaration. The obligation does not apply to e-residents (foreigners who are not tax residents of Ukraine).

The introduction of the military fee for sole proprietors on the single tax system is a significant change in Ukraine’s tax system in 2025. Although this will increase the tax burden on entrepreneurs, such steps are explained by the need to finance the country’s defense capabilities. At the same time, benefits for certain categories of taxpayers will help reduce the negative impact of the new rules on the most vulnerable groups of entrepreneurs.

Commentary by Mykhailo Yevseyev:

Tax increases are not always perceived positively by society. However, in a time of war, we must understand that this is a necessary measure aimed at filling the budget and increasing spending. We will be able to see how the changes will work in practice after the first quarter of this year.

 

 

Ready to discuss your situation?
Contact us and we will find the best solution for you.