ADVANCE PAYMENTS AND INCREASED MILITARY TAX: UKRAINIAN PRESIDENT SIGNS NEW RULES FOR FUEL RETAILERS

On November 28, 2024, the President of Ukraine signed Bill No. 11416-d, titled “On Amendments to the Tax Code of Ukraine and Other Laws of Ukraine to Ensure Balanced Budget Revenues During Martial Law.” This legislation introduces significant tax changes, specifically targeting fuel retailers, while also revising rules for the military tax.

Advance Payments for Fuel Retailers

According to the new law, businesses involved in retail fuel sales are required to make monthly advance payments for corporate income tax by the 20th of each month. The amount depends on the type of fuel sold:

• ₴60,000 per fuel retail point;
• ₴30,000 for points selling only liquefied gas;
• ₴45,000 for points where 50% or more of sales (by volume adjusted to 15°C) are from liquefied gas.

The law specifies that these advance payments are non-refundable and cannot be credited against future tax liabilities. Starting January 1, 2025, failure to comply with advance payment requirements will result in penalties under Article 125 of the Tax Code and the potential revocation of operating licenses.

Military Tax Updates

The law also introduces new military tax rates:

• 5% of taxable income for employees;
• 10% of the minimum wage for sole proprietors (FOPs);
• 1% of income for single tax payers in Group III.

The new rates apply to income accrued after the law takes effect and will remain valid until the end of the year in which martial law concludes.

Implications for the Fuel Retail Sector

If the law’s text was published on November 28 or 29, 2024, fuel retailers will have 20 calendar days to pay the advance tax for November. As a result, payments for both November and December will be due in December 2024. Ukraine, with over 7,000 fuel stations, is expected to generate substantial tax revenue from these advance payments, strengthening the state’s budget during wartime.

This move aims to ensure stable revenue flows while providing a level playing field for market participants. Experts predict that the legislation could also impact consumer fuel prices due to increased operational costs.