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J&L Consulting Newsletter – December 2, 2024

·       New Rules for Military Reservation in Ukraine: Key Changes from December 2024

·       Ukraine Introduces New Tax and Military Levy Changes from December 2024

New Rules for Military Reservation in Ukraine: Key Changes from December 2024

The Cabinet of Ministers of Ukraine has published the long-awaited resolution No. 1332, effective from December 1, 2024, reinstating the military reservation system. The key changes in the process include the introduction of an automated system through the "Дія" app, replacing paper-based reservations via the Ministry of Economy.

Military personnel can now be automatically reserved if they meet the following criteria:

• They are enlisted in the military register.
• They are employed at a critical enterprise.
• Their monthly salary over the last reporting period is at least 20,000 UAH (2.5 times the minimum wage).
• They are not under investigation.

This information will be automatically verified through relevant registries. However, it remains unclear whether employees need to wait an entire reporting quarter to qualify for booking, or if a salary payment in the last month before applying will suffice. New employees may have to wait until April 2025 for booking eligibility.

Additionally, the average salary threshold for critical enterprises has been raised to 20,000 UAH. Female military personnel are no longer counted within the reservist quota. Reservations can be canceled via the "Дія" app. The critical status of enterprises will now be approved by both the Ministry of Economy and the Ministry of Defense.

The Ministry of Digital Transformation is still clarifying technical aspects, particularly regarding the period of salary verification.

Ukraine Introduces New Tax and Military Levy Changes from December 2024

From December 1, 2024, Ukraine’s new tax law, 4015-IX, takes effect, introducing key changes to the Tax Code. The government has clarified important aspects of the reform:

• No Retroactive Taxes: The law applies only from its enforcement date, with necessary adjustments for uniform implementation being finalized by Parliament.
• Military Levy Increase:
• For individuals, the military levy rises from 1.5% to 5% on salaries, rental income, winnings, and bank deposits.
• For FOPs (individual entrepreneurs):
• Groups 1, 2, and 4 will pay 10% of the minimum wage (800 UAH/month) starting January 2025.
• Group 3 will pay 1% of turnover, calculated from Q1 2025 onwards.
• Exemptions: The military levy does not apply to social payments, pensions, scholarships, or income exempt from personal income tax. Additionally, income from government bonds (ОВДП) purchased by individuals is exempt.
• Revenue Projections: The government expects to raise 8 billion UAH by the end of 2024 and 140 billion UAH in 2025 from these tax changes.

These measures aim to strengthen fiscal resources while addressing the ongoing needs of the military and public finance systems.