TAX ALERT 17.07.2025 | Digest of Key Tax News

Changes to the taxation of self-employed persons called up for military service: the law has entered into force

On 05 July 2025, the Law of Ukraine No. 4505-IX “On Amendments to the Tax Code of Ukraine and Other Laws of Ukraine on Expanding Patient Access to Medicines Subject to Procurement by a Person Authorised to Procure in the Healthcare Sector by Concluding Managed Access Agreements” came into force.

This law provides, in particular, for changes to the taxation of self-employed persons called up for military service during mobilisation or engaged in mobilisation duties during a special period, or under a contract.

The law establishes that self-employed persons are exempt from the obligation to accrue, pay and submit tax returns on personal income tax (“PIT”), single tax, military fee for the entire period of their service, namely from the first day of the month in which the person is called up for military service or in which the contract is concluded, but not earlier than 24 February 2022, until the last day of the month in which the person is demobilised (discharged from military service).

From now on, the basis for such exemption is the information received by the State Tax Service of Ukraine from the Unified State Register of Conscripts, Persons Liable for Military Service and Reservists (the “Register”) about the date of mobilisation, conclusion of a contract, or demobilisation of the relevant person.

However, if the information about the person is actually not in this Register, he/she has the right to submit to the tax authority an application and a copy of a military ID card / other document containing information about the call-up of such person for military service.

At the same time, such a person retains the obligation to:

• pay PIT and military fee accrued by his/her authorised person on payments to employees during the self-employed person’s military service within 180 days from the date of demobilisation (discharge from military service), without any penalties, financial sanctions or fines;
• submit tax reports on the amounts of this PIT and military fee within 150 days from the date of demobilisation (discharge from military service) without imposing penalties and financial sanctions, fines.

It is proposed to update the requirements and criteria for inclusion in the “White Business Club”: the draft law has been registered

On 7 July 2025, the Verkhovna Rada of Ukraine registered Draft Law No. 13455 “On Amendments to Subparagraph 69.41 of Clause 69 of Subsection 10 of Section XX “Transitional Provisions” of the Tax Code of Ukraine regarding the improvement of the procedure for forming the List of taxpayers with a high level of voluntary compliance with tax legislation”.

The draft law proposes to amend, inter alia, the requirements/criteria for taxpayers to be included in the List of taxpayers with a high level of voluntary compliance with tax legislation (the so-called “White Business Club”).

In addition to meeting most of the applicable requirements and criteria, taxpayers are expected to meet, in particular, the following:

• the amount of fines imposed on them during the last three consecutive calendar months for violation of tax obligations to submit reports and/or documents does not exceed the amount of one minimum wage, provided that the fines have been paid, except for those that are disputed;
• the Unified State Register of Legal Entities, Individual Entrepreneurs and Public Organisations contains information on the ultimate beneficial owner of a legal entity and does not contain a note on the possible unreliability of such information or a justified reason for its absence;
• the corporate income tax payment rate is equal to/exceeds the average corporate income tax payment rate for enterprises in the relevant industry for the last four quarters only if the taxable object declared for the last tax (reporting) period exceeds UAH 0;
• the value added tax payment rate is equal to/exceeds the average rate in the relevant industry (except for taxpayers whose zero-rate transactions, transactions not subject to taxation, transactions for the supply of services outside the customs territory of Ukraine, transactions exempt from taxation account for 25 per cent or more of the total supply) for the last 12 reporting (tax) periods;
• the average monthly accrued and/or paid salary for the last 12 reporting (tax) months is equal to/exceeds the average salary in the relevant industry in the relevant region multiplied by a coefficient of 1.1, but now not less than one minimum wage, provided that the average monthly number of employees for the said period is at least five people.
  
  It is also proposed to conduct documentary unscheduled audits of taxpayers that will be members of the “White Business Club”, in particular, on the basis of tax information received by the controlling authority that indicates that the taxpayer has violated the law only on taxation of income received by non-residents with their source of origin in Ukraine and transfer pricing control.
  
  At the same time, the draft law stipulates that the following entities will not be included in the “White Business Club”:
  
• separate divisions of legal entities (residents);
• foreign companies, organisations and their separate subdivisions, including permanent establishments;
• authorised persons under joint venture agreements, property managers under property management agreements, investors (operators) under production sharing agreements, implementers of international technical assistance projects (programmes) and representative offices of donor agencies in Ukraine.
  According to the explanatory note, this draft law is one more step towards improving the criteria and requirements for inclusion in the “White Business Club”.

Taxation under martial law: the overview of the Supreme Court’s practice

On 07 July 2025, the Supreme Court published a review of the case law of the Administrative Court of Cassation within the Supreme Court on taxation under martial law for the period from February 2022 to June 2025.
The review analyses the legal positions of the Supreme Court, in particular, regarding:

Force majeure. Thus, in its resolution dated 04 October 2023 in case No. 160/19575/22, the Court noted that a taxpayer who, due to hostilities, lost the ability to conduct business, receive income from it and/or lost fixed assets cannot be held liable for failure to fulfil tax obligations. The circumstances of the impossibility of timely fulfilment of the tax obligation must be real and objective, not formal. The taxpayer is obliged to provide an exhaustive list of documents confirming the occurrence of circumstances that make it impossible to conduct business and fulfil tax obligations.

Value added tax. Among other things, in its resolution dated 28 February 2024 in case No. 200/466/23, the Court formulated a legal position according to which, for the period of martial law, the legislator introduced a special legal regime for the formation of a VAT tax credit for February – May 2022 and established the possibility to include VAT amounts in the tax credit on the basis of primary (settlement) documents available to the payer in the absence of registered tax invoices.

Excise tax. The resolution dated 28 May 2025 in case No. 320/14811/24 states that the establishment of the misuse of fuel for use by military units based on the results of a desk audit is an abuse of power of the tax authority and a ground for declaring the tax notice-decision issued on this basis unlawful, and the audit report itself inadmissible evidence. A desk audit is conducted only in accordance with tax reports and electronic registers, without analysing primary documents or establishing the fact of the intended use of fuel, which can only be done during a documentary audit.

Tax benefits. In particular, the resolution dated 30 November 2022 in case No. 280/5185/19 states that residential and non-residential real estate owned by individuals or legal entities and located in the temporarily occupied territory and/or the territory of settlements on the war line are not subject to real estate tax other than land, and therefore cannot be part of the tax base.