Despite the fact that Ukraine is a developing country, and some taxes are very low (compared to European Union or the UK) or even do not exist, the total Ukrainian payroll tax rate is quite high.
What are the payroll taxes in Ukraine?
In Ukraine as in many other countries, all the payroll processing and taxation are managed by the bookkeeper. If you own a company in Ukraine be sure to have a good Ukrainian accountant as the fine for violation of payroll legislation in Ukraine is high.
When the employer is going to pay the salary to the employee in Ukraine, there are 3 taxes that shall be transferred to the budget by the executive:
- 18% – individual profit tax;
- 1,5% – war tax;
- 22% – social security tax;
All 3 taxes shall be transferred by the company (the employer) before not later than the moment when the salary is paid. It is also possible the salary. Moreover, the bank is obliged to control this requirement. Even the statement itself shall contain the information that the taxes were paid in full. Unlike other countries, social security tax is the duty that shall be additionally paid by the employer. So the company shall increase the expenses per each employee by 22%. Consider it when calculating your financial structure and expenses in Ukraine. Meanwhile, the amount that is to be transferred to the employee shall be reduced by the amount of war tax and individual profit tax (19,5%) that are considered deductions from an employee’s wages. So, the employer is considered as the tax agent, under Ukrainian law and has the obligation to withhold and to transfer certain taxes to the budget of Ukraine.
Of course, the salary shall be paid based on the employment contract. The minimal wage in Ukraine is UAH 6000 per one month, as of 01-st June 2021. It means that you can not hire an employee in Ukraine and pay less than the mentioned amount officially. There is also the requirement to pay the salary 2 times in a month. Between 15-th and 20-th day of each month, it is necessary to pay the advanced payment of the salary for the current month and between 01-st and 07-th of the next month it is necessary to pay the remaining salary. As we have informed you before when conducting the payroll transfer in Ukraine the company has to pay all 3 taxes at once.
What statements on payroll shall be submitted by the employer in Ukraine?
The Ukrainian company has the obligation to submit the salary statements every month, by the 19-th day of the next month. The statement shall include the name, surname, tax id number of the employee, and the amount of salary and taxes that had been paid by the company. The statements shall be signed by the company director and (if there is any) by the official accountant. Consider that the data in the payroll declarations shall fully match with the amount of actually paid salary. The Ukrainian employer shall submit the following declarations on the paid wages:
- war tax declaration;
- social security tax declaration;
- tax on personal income.
Consider also that in case if you are an employee it is not necessary to submit any declaration to the tax authorities in case if you did not receive any other income except your salary.