Zelensky has signed a law that cancels the retroactive tax hike.

The President of Ukraine Volodymyr Zelensky has signed a law amending the Tax Code of Ukraine and several other legislative acts aimed at stimulating the development of the digital economy in Ukraine – the cancellation of retroactive tax increases (bill 9319).

From now on, individual entrepreneurs will pay increased taxes starting January 1, 2025.

As previously reported by “Judicial and Legal Newspaper,” on December 4, the Verkhovna Rada adopted in full bill 9319, which amended the Tax Code to address issues arising from Law No. 4015-IX regarding the "historic" tax increases that took effect on December 1.

This so-called "resource" law 11416-d was passed in October and was only signed by the President at the end of November. Ultimately, the provision that stipulated retroactive tax increases from October 1 lost its legal meaning.

Consequently, the relevant "changes to changes" were made through amendments during the second reading of another law "to stimulate the development of the digital economy in Ukraine" (bill 9319).

As explained after the adoption of bill 9319 by the Chairman of the Verkhovna Rada Committee on Tax Policy Danylo Hetmantsev, the correction of the shortcomings of the "resource" law on tax increases, which was adopted by parliament on December 4, includes:

• the cancellation of retroactive taxation (i.e., it will not be from October 1)
• for single tax payers, a military tax will be introduced starting January 1, 2025
• for income reported in the annual declaration for 2024, a rate of 1.5% will apply (except for property transactions conducted in December 2024)
• provisions for exemptions from the military tax for individual entrepreneurs in temporarily occupied territories, military personnel, individual entrepreneurs on sick leave, and vacation, similar to the single tax
• the abolition of the military tax for e-residents
• the possibility of crediting the military tax paid by individual entrepreneurs towards the minimum tax liability and other clarifying provisions.

“It is important that these changes will take effect from the day the 'resource' Law comes into force, that is, from December 1, 2024,” added Hetmantsev.