New taxes for individual entrepreneurs in Ukraine: how much will different groups have to pay in 2025

Starting from January 1, 2025, Ukrainian individual entrepreneurs (IEs) will pay taxes at new rates – the law on the application of the updated rules was signed by President Volodymyr Zelenskyy. In particular, the law introduces mandatory payment of military duty for individual entrepreneurs. As a result, sole proprietors of the 1st and 2nd groups will have to pay a fixed additional UAH 800 of the military tax per month, while entrepreneurs in the 3rd group will have to pay a tax amount depending on their income.

OBOZ.UA writes about the tax rules that will apply to individual entrepreneurs from January 1, 2025. The introduction of the military fee for individual entrepreneurs will definitely take place in the new year, as on December 25, President Volodymyr Zelenskyy signed Bill No. 9319, the amendments to which postpone the application of this rule retroactively to January 1.

IE taxes 2025: who will pay how much and what are the limits

The main innovation in 2025 for individual entrepreneurs is the need to pay the military tax, which for other taxpayers has already increased from 1.5% to 5% as of December 1, 2024. However, sole proprietors will not pay 5%:

• Individual entrepreneurs of the 1st, 2nd and 4th groups

For these individuals, the military fee is fixed at 10% of the minimum wage. Since the minimum wage will not be increased from the new year and will remain at the level of UAH 8000, you will have to pay a fixed amount of UAH 800 per month. The payment is due by the 20th of each month, along with the single tax.

• Individual entrepreneurs of the 3rd group

The rate of the military fee for the third group of single taxpayers is set at 1% of income. For example, for a sole proprietor with a monthly income of UAH 30 thousand, it will be UAH 300. Payment is due within 10 days after submitting the quarterly declaration. You also need to submit an annual declaration by February 10 of the year following the reporting year (i.e., for 2025 by February 10, 2026).

However, sole proprietors pay not only the military fee. For example, sole proprietors have to pay a single social contribution (SSC) even if they have no income. The minimum UST rate is 22% of the minimum wage. This is UAH 1760 per month or UAH 21120 per year. You can pay more (this affects the amount of your future pension), but this amount is mandatory.

Individual entrepreneurs also pay a single tax directly. Its amount depends on the group: in 2025, it will be UAH 302.8 for the first group; UAH 1600 for the second group; and 5% of turnover (not income) for the third group.

Annual income limits for individual entrepreneurs are calculated based on the minimum wage. That is, in 2025, they will not change and will be as follows:

• for sole proprietors of the 1st group – UAH 1,336,000 (167 minimum wages);
• Group 2 sole proprietors – UAH 6,672,000 (834 minimum wages);
• Group 3 sole proprietors – UAH 9,336,000 (1,167 minimum wages).

New rules for bank checks await individual entrepreneurs

Due to widespread tax evasion schemes in Ukraine, new, stricter financial monitoring measures will be introduced for individual entrepreneurs. In particular, special attention will be paid to a sharp increase in transactions and exhaustion of limits, splitting of transfers, and significant amounts of income.

This was agreed by the largest banks of Ukraine in the memorandum "On Ensuring Transparency of the Banking Payment Services Market." The document was signed on December 10 by the National Bank of Ukraine, the National Association of Banks of Ukraine (NABU), the Association of Ukrainian Banks (AUB), PrivatBank, Oschadbank, Raiffeisen Bank, and Universal Bank, which includes monobank.

Group 1 sole proprietors registered within the last 6 months will be subject to the most thorough scrutiny, as they will face enhanced financial monitoring. Banks will apply their own risk-oriented approaches to sole proprietorships of the 2nd and 3rd groups. Sole proprietorships will also be checked for split-up schemes, namely, they will be subject to scrutiny:

• significant receipts to the sole proprietorship's accounts from a legal entity or other business entities;

• payment by a legal entity for services to a sole proprietorship, the cost of which is difficult to estimate;
• a significant volume of financial transactions on the accounts of the new sole proprietorship;
• reaching the maximum amount of income per year for a sole proprietorship within 2-3 months;
• use of one payment terminal of a financial institution by several business entities.

The innovations will help to overcome widespread tax evasion schemes, said Danylo Hetmantsev (Servant of the People), Chairman of the Verkhovna Rada Committee on Finance, Taxation and Customs Policy. This is especially true of counteracting the fragmentation of medium and large businesses that hide from paying taxes behind fake individual entrepreneurs.

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