Taxes in Ukraine for business

Businesses in Ukraine pay corporate income tax (CIT) at the base rate of 18% and value added tax (VAT) at the standard rate of 20%. The general rate of the single social contribution (SSC), paid by the employer on top of salary, is 22%. Employers withhold 18% personal income tax (PIT) and a 5% military levy from ordinary salaries. Individual entrepreneurs (FOP) and legal entities with annual income of up to UAH 10,091,049 (approx. USD 222,000) may use Group III of the simplified system at a single tax rate of 3% or 5% if they meet the statutory requirements.

This article is intended for foreign and Ukrainian entrepreneurs, investors, company managers, accountants and finance teams planning to enter the Ukrainian market or already doing business in Ukraine.

1. Corporate income tax in Ukraine

2. Value added tax in Ukraine

3. Simplified tax system for Group III

4. Payroll taxes and social contributions

5. Practical tax compliance checklist for businesses

Frequently asked questions

How DLF can help

Main taxes in Ukraine in 2026

Approximate USD amounts use the official National Bank of Ukraine rate applicable on 30 October 2026 (USD 1 = UAH 45.5293); UAH amounts prevail.

1. Corporate income tax in Ukraine

1.1. Who is subject to CIT

The main CIT payers are Ukrainian resident legal entities carrying on business activities. Non-residents are taxed on Ukrainian-source income. Taxation of profits attributable to a permanent establishment differs from withholding on dividends, interest, royalties and other taxable payments to a non-resident. The domestic rate and any applicable double tax treaty must be checked for these payments.

Legal entities on the simplified tax system and qualifying non-profit organisations do not pay CIT under the general rules, subject to the conditions and exceptions in the Tax Code of Ukraine. However, withholding obligations on payments to non-residents can still arise.

1.2. CIT rates

The base rate is 18% of taxable profit.

Law No. 4698-IX sets a 50% CIT rate for banks for all 2026 tax periods. In 2026, banks may not reduce their pre-tax financial result by prior-year tax losses. Unused losses, including those incurred in 2026, may be carried forward from 2027. Under current legislation, the rate for banks will revert to 25% in 2027.

Non-bank financial institutions (such as credit unions, pawnshops and leasing companies), other than insurers, pay CIT at 25%.

Insurers pay CIT at 18% and a tax on income under insurance contracts at 3%. A 0% rate of this tax applies to qualifying contracts for long-term life insurance, voluntary medical insurance and insurance within non-state pension provision.

Diia City residents electing the special CIT regime may apply a 9% rate to the tax base defined in the Tax Code.

1.3. Tax base

Taxable profit is based on the pre-tax accounting financial result, taking account of tax adjustments. Returns are filed quarterly or annually, depending on the taxpayer category. For most taxpayers, the tax year coincides with the calendar year.

2. Value added tax in Ukraine

2.1. VAT registration

Mandatory VAT registration arises when supplies counted towards the registration threshold on the customs territory of Ukraine exceed UAH 1,000,000 (approx. USD 22,000), excluding VAT, over the last 12 calendar months. Transactions subject to a zero-rate tax are also taken into account, whilst transactions exempt from VAT are not included in this total. Single tax payers in Groups I–III are exempt from this registration requirement. Import VAT is paid at customs clearance regardless of the importer’s VAT registration status where the import is taxable and no exemption applies.

Voluntary registration is available at any turnover level. It is often commercially beneficial where counterparties are VAT payers and need input tax credits.

The reporting period for ordinary VAT payers is a calendar month. Non-residents supplying electronic services under the special rules have a quarterly reporting period.

2.2. VAT rates

The standard rate is 20% of the tax base.

The reduced rates are:

• 14% applies to supplies and imports of the following agricultural goods: wheat, barley, maize, soya beans, rapeseed and sunflower seeds;
• 7% applies, among other cases, to the following transactions, subject to the statutory conditions:
• supplies and imports of authorised medicines entered in Ukraine’s State Register of Medicinal Products, compliant medical devices, and qualifying goods for clinical trials and access programmes for unregistered medicines;
• theatre, opera, ballet, concert and circus events, film premieres, cultural and arts events, and museum and zoo admissions;
• temporary accommodation supplied by hotels and similar establishments under KVED class 55.10.

2.3. Scope of VAT

VAT covers supplies of goods and services whose place of supply is in the customs territory of Ukraine, and imports of goods. As a general rule, liability arises on the earlier of payment or dispatch of the goods; for services, the corresponding event is the preparation of a document certifying their supply. Special rules apply to certain transactions.

The zero rate applies, among other cases, to:

• exports under the export, duty-free trade and free customs zone regimes, and qualifying re-exports, with the required customs evidence;
• international transport of passengers, baggage and cargo under a single international transport document;
• goods supplied for fuelling and provisioning qualifying vessels and aircraft, and specified services for aircraft operating international flights;
• processing and other work on movable property previously imported into Ukraine and subsequently exported by the service provider or the non-resident customer.

2.4. VAT refund

Where input VAT exceeds output VAT, the negative amount is first applied against VAT arrears within the registration limit. The balance may be carried forward or claimed as a budget refund within the VAT actually paid and the registration limit, subject to the refund conditions. A refund application is filed with the VAT return and is then reviewed by the tax authority.

3. Simplified tax system for Group III

3.1. Eligibility

Both individual entrepreneurs (FOP) and legal entities of any legal form may use Group III of the simplified system if the statutory requirements are met. There is no limit on the number of employees.

The annual income limit is 1,167 times the minimum wage set on 1 January of the tax year. With the 2026 minimum wage at UAH 8,647 (approx. USD 190), the limit is UAH 10,091,049 (approx. USD 222,000). A legal entity that exceeds the limit must switch to the general tax system.

E-residents registered as individual entrepreneurs may use Group III under additional conditions: services, production and/or sales of goods must be exclusively for non-residents of Ukraine, no Ukrainian citizen or resident may be employed, and no Ukrainian-source income other than passive income may be received.

3.2. Rates

The single tax rate for Group III payers is:

• 3% — for VAT-registered payers;
• 5% — without VAT registration. This is the only rate available to e-residents and to individual entrepreneurs manufacturing, supplying or selling jewellery and household articles made of precious metals and stones within the statutory categories.

Elevated rates apply to income received in breach of the simplified system’s conditions (above the annual limit, from prohibited activities, or through non-permitted settlement methods):

• 15% — for individual entrepreneurs (Groups I–III);
• 6% or 10% (doubled base rates) — for Group III legal entities, depending on their chosen base rate.

Ordinary Group III payers declare and pay single tax quarterly. E-residents follow a special procedure in which the bank withholds and remits the tax as their tax agent.

3.3. Restrictions

Prohibited activities. Banks, credit unions, pawnshops, leasing companies, trust companies, insurance companies, pension funds, investment funds, and securities registrars cannot use the simplified system. From 2026, security services are also a prohibited activity: this change was introduced by the same law that set the bank CIT rate at 50%.

Ownership structure. A legal entity cannot use the simplified system if legal-entity shareholders that are not single tax payers hold 25% or more of its charter capital in aggregate. This threshold does not apply to individual shareholders, including non-residents. For example, a foreign individual may own an entire Ukrainian company using Group III if all other requirements are met. By contrast, a holding of 25% or more by a foreign company that is not a single tax payer prevents use of the simplified system.

Non-residents as taxpayers. Non-resident individuals and legal entities cannot themselves be single tax payers; e-residents are covered by a special regime. A Ukrainian legal entity with foreign owners remains a Ukrainian resident, so its eligibility is assessed under the rules for Ukrainian companies.

Consequences of a breach for legal entities. A legal entity that exceeds the annual income limit must move to the general tax system. The switch takes effect from the first day of the quarter after the one in which the limit was breached.

4. Payroll taxes and social contributions

4.1. Personal income tax

The employer acts as a tax agent and withholds PIT from employee income. The standard employment-income rate is 18% of the tax base. Ordinary dividends from Ukrainian CIT-paying companies are generally taxed at 5%, while dividends from non-residents or companies that do not pay CIT are taxed at 9%. Special rules apply to dividends on preferred corporate rights and certain other payments.

4.2. Military levy

The employer withholds the military levy alongside PIT. For ordinary salary income, the rate is 5% of taxable gross earnings. The personal tax allowance that may reduce the PIT base does not reduce the military levy base.

For single tax payers:

• FOP in Groups I, II and IV pay a monthly military levy of 10% of the minimum wage as at 1 January: UAH 864.70 (approx. USD 19) in 2026;
• payers in Group III, both FOP and legal entities, other than e-residents, pay 1% of income determined under the single tax rules.

Law No. 4835-IX extended the military levy for single tax payers and the increased rate on ordinary individual income until 31 December of the third calendar year following the year in which martial law ends or is cancelled.

4.3. Single social contribution (SSC)

The employer pays SSC on top of accrued salary; it is not withheld from employee income. The general rate is 22% of the contribution base. The Law on the Single Social Contribution also provides for special rates and exceptions.

Key figures for calculating SSC in 2026:

• Minimum SSC base: UAH 8,647 (approx. USD 190)/month (the minimum wage). As a general rule for employees at their principal place of work, SSC is calculated on the minimum-wage base even where actual earnings are lower; statutory exceptions apply.
• Maximum SSC base (general workers): UAH 172,940 (approx. USD 3,800)/month (20 × minimum wage). The corresponding maximum monthly contribution is UAH 38,046.80 (approx. USD 840).
• Minimum monthly contribution: UAH 1,902.34 (approx. USD 42) (22% × UAH 8,647 (approx. USD 190)).

FOP and SSC. Individual entrepreneurs, other than e-residents, pay SSC for themselves unless exempt. Under the simplified system, they choose a monthly base between UAH 8,647 (approx. USD 190) and UAH 172,940 (approx. USD 3,800); the minimum contribution is UAH 1,902.34 (approx. USD 42). Under the general system, SSC is calculated on net taxable income. FOP on the general system may omit their own SSC payments for months with no net taxable income.

The general wartime right for FOP to omit their own SSC payments is suspended for 2026. Specific exemptions remain, including those for recipients of old-age or length-of-service pensions, persons with disabilities, and qualifying persons of pension age receiving a pension or social assistance. FOP are also exempt for months in which an employer has paid at least the minimum insurance contribution for them.

5. Practical tax compliance checklist for businesses

• Determine the company’s tax status and assess any permanent establishment risk for a non-resident.
• Check the CIT rate and tax base, or eligibility for Group III, taking account of income, ownership structure and activities.
• Check whether VAT registration is mandatory and whether voluntary registration would be beneficial.
• Identify the applicable VAT rates, available exemptions and refund conditions for the planned transactions.
• Before making payments to non-residents, check the tax rate and any applicable double tax treaty.
• Allow for PIT and military levy withheld from salary and SSC paid by the employer on top of salary.
• For FOP, check the obligation to pay their own SSC and entitlement to an exemption.
• Establish the reporting frequency and deadlines for paying taxes and SSC.

Frequently asked questions

Must a foreign company or its permanent establishment register for VAT in Ukraine?

Where a non-resident supplies goods or services through a permanent establishment in Ukraine, the general mandatory-registration threshold applies to that establishment: more than UAH 1,000,000 (approx. USD 22,000), excluding VAT, over the last 12 calendar months. Voluntary registration is also possible. Special rules apply to non-residents without a permanent establishment that supply electronic services to individuals in Ukraine, including a different period for calculating the registration threshold.

What VAT rate applies to imported goods?

The standard import VAT rate is 20%. Rates of 14% or 7% apply to certain goods, and some imports are exempt. Where import VAT is payable, it is paid at customs clearance regardless of the importer’s VAT registration status.

Can a foreign individual shareholder’s Ukrainian company use Group III?

Yes, if the company meets the other simplified-system requirements. The 25% threshold is based on the aggregate interests of legal-entity shareholders that are not single tax payers. It does not apply to a foreign individual shareholder, regardless of the size of their interest. A holding of 25% or more by a foreign company that is not a Ukrainian single tax payer prevents use of the simplified system.

Are FOP required to pay SSC for themselves in 2026?

Yes, except for e-residents and persons entitled to an exemption. The wartime relief is suspended for 2026, so the minimum own contribution for FOP on the simplified system is UAH 1,902.34 (approx. USD 42) per month. Exemptions remain, for example, for old-age or length-of-service pensioners, persons with disabilities and months for which an employer has already paid at least the minimum contribution. FOP on the general system may omit their own SSC for months without net taxable income.

What is the real payroll cost for an employer in Ukraine?

On a gross salary of UAH 10,000 (approx. USD 220), the employer’s total cost is UAH 12,200 (approx. USD 270): UAH 10,000 (approx. USD 220) in wages plus UAH 2,200 (approx. USD 48) in SSC (22%). The employee takes home UAH 7,700 (approx. USD 170) after UAH 1,800 (approx. USD 40) of PIT and UAH 500 (approx. USD 11) of military levy are withheld. Net salary therefore represents about 63% of total employer cost and 77% of gross salary.

When must a Group III legal entity switch to the general tax system?

A switch is mandatory in cases including annual income exceeding UAH 10,091,049 (approx. USD 222,000), prohibited activities, non-permitted settlement methods, or an ownership change resulting in an aggregate holding of at least 25% by legal entities that are not single tax payers. The legal entity switches from the first day of the following quarter. The doubled rates of 6% or 10% apply to excess income and income from prohibited activities or non-permitted settlements.

How DLF can help

DLF attorneys-at-law advises foreign companies and investors entering or operating in Ukraine. Its work covers choosing and registering a legal entity, reviewing ownership structures, preparing corporate and employment documents, and assessing VAT, corporate income tax, cross-border payments, and payroll liabilities. The firm provides tax-law advice and support in corporate law and M&A, including tax risk reviews, contract checks and investment structuring.

Igor Dykunskyy, Partner, Attorney-at-Law — DLF attorneys-at-law.

Contact: +380 44 384 24 54, [email protected].

This material is intended for general information only. The application of the approaches described depends on the circumstances of the specific situation and requires a separate legal assessment.