Following the enactment of Law of Ukraine No. 4536-IX dated 16 July 2025 “On amendments to the Tax Code of Ukraine and other legislative acts of Ukraine in connection with adoption of the Law of Ukraine “On integrated prevention and control of industrial pollution” and with a view to improving certain provisions of tax legislation”, key innovations were introduced on 3 September 2025. These innovations encompass social benefits, reporting, environmental requirements, licensing and local taxes.
Law No. 4536-IX introduces changes to the following:
- Tax Code of Ukraine
- Law of Ukraine No. 2464-VI dated 08.07.2010 “On the collection and accounting of a single contribution for compulsory state social insurance”
- Law of Ukraine No. 3817-IX dated 18.06.2024 “On state regulation of production and turnover of ethyl alcohol, alcohol distillates, bioethanol, alcoholic beverages, tobacco products, tobacco raw materials, liquids used in electronic cigarettes and fuel”.
Key amendments to the Tax Code of Ukraine
Law No. 4536-IX introduces several significant updates. Specifically, combatants and persons with disabilities resulting from war are entitled to a tax credit for renting accommodation. Prisoners of war are included in the category of individuals liable for taxation, including tax agents (such as military camps, pre-trial detention centres, and prisons). These individuals are responsible for paying personal income tax and military tax and are required to submit monthly reports.A quarterly reporting period is to be introduced in place of the monthly reporting period for the following:
- Individual entrepreneurs and persons engaged in independent professional activities for hired employees (personal income tax, military tax, single social security tax).
- Private notaries and individual entrepreneurs who provide services for the conclusion of exchange agreements.
- Extension until 1 January 2028 of the cash method of VAT calculation for suppliers of electricity, heat, water, coal and related services.
- Exemption from VAT of transactions involving the free transfer of engineering infrastructure facilities of land reclamation systems until Ukraine’s accession to the EU.
Land tax rates:
- 8% of the normative monetary valuation for plots with a valuation provided to mining companies
- 12% of the normative valuation of arable land in the region for plots without a valuation provided to mining companies.
For single taxpayers in Group IV, there is now an obligation to reflect transferred or received land (including under emphyteusis) in their tax returns.
Local taxes can now be adjusted downward during the year while martial law is in effect.
A new procedure for determining tax liabilities will be introduced for rent payments for oil and condensate. This will be in effect from 1 September 2025 until the end of martial law.
With regard to environmental taxes, there is an obligation to submit copies of declarations within 40 days of the reporting period being introduced. Furthermore, data from the integrated environmental permit is taken into account when calculating the rent payment for water.
Amendments to Law No. 3817
- The free distribution of tobacco raw materials, e-cigarette liquid raw materials and nicotine is strictly prohibited.
- A minimum income/salary level has been established for sole proprietors without employees who have obtained licences for the retail sale of alcohol, tobacco products, e-cigarette liquids or fuel.
- In the event of three months of non-compliance with the established level of income/salary, the licence may be revoked.
- A penalty has been introduced for the free distribution of the specified goods. The penalty is 200% of the goods’ value, but not less than three minimum wages.
Amendments to Law No. 2464
Sole proprietors and persons engaged in independent professional activities are exempt from paying single social security tax for themselves, provided that an employer pays the minimum insurance contribution on their behalf (regardless of whether it is their primary or secondary place of work).
Effective dates of amendments:
- Basic rules — from 1 October 2025
- Rules on environmental tax and rent payments — from 8 August 2025
- Rules on quarterly reports (personal income tax, military tax, single social security tax) — from 1 January 2026.
As we can see, Law No. 4536-IX introduces significant changes in taxation, reporting and licensing, which relate to both businesses and individuals.
It is important to note the following positive aspects of the tax innovations:
- Social aspect: tax relief is provided on housing rentals for veterans and persons with disabilities resulting from war (targeted support for vulnerable groups).
- Fiscal justice: inclusion of prisoners of war among those who pay taxes.
- Administrative simplification:
• Quarterly reporting period for sole proprietors and independent professionals, aimed at simplifying reporting.
• Exemption of sole proprietors from single social security tax, provided that the employer pays contributions for part-time work to avoid double payment of single social security tax.
- Economic incentives:
• Extension of the cash method of VAT until 2028 for energy and utility providers.
• VAT exemption for the transfer of land improvement infrastructure, which should contribute to the development of the agricultural sector.
- Flexibility for local budgets: the possibility of reducing local taxes during martial law.
- Environmental control: the integration of tax reporting with environmental permits should improve pollution control.
- The anti-smoking policy includes a prohibition on the free distribution of tobacco raw materials, with substantial fines to ensure strict enforcement and reduce the illegal market.
The following may be considered as potential negative consequences for taxpayers:
- Additional burden:
• Mandatory disclosure of land plots in the declaration for single taxpayers of group IV, which may complicate administration.
• New obligation to submit copies of eco-tax declarations within a short period of time, which may lead to increased bureaucracy.
- Financial pressure on businesses:
• increased land tax rates for mining companies
• minimum income level for sole proprietors with alcohol/tobacco licences, which may create an additional barrier for small businesses
• risk of losing a licence for failure to comply with new requirements within three months.
- Increased tax risks: a more complex procedure for determining rent payments for oil and condensate during wartime may lead to unpredictability in the tax burden.
Recommendations for adapting to change
- Sole proprietors and independent professionals should prepare for quarterly reporting from 01.01.2026 and take into account the exemption from single social security tax (SSST) provided that the SSST is paid by the employer on a part-time basis.
- Mining companies should review tax planning in connection with increased land tax rates.
- Market participants in the alcohol, tobacco and fuel sectors should ensure compliance with the new minimum income requirements for sole proprietors and avoid the risk of licence revocation.
- Energy, utility and water management companies should use the cash method until 2028 and closely monitor VAT-exempt transactions.
- All taxpayers should consider possible changes in local tax rates during the period of martial law.
- Enterprises with environmental permits should organise the timely submission of environmental tax returns and verify compliance with the limits of integrated permits.
Law No. 4536-IX demonstrates the state’s commitment to achieving a balance between social support, fiscal efficiency and environmental responsibility. This necessitates adaptation to new requirements by businesses and individuals. We view this as an opportunity to prove ourselves as a reliable partner in this process, providing professional support, analytics and strategic solutions.
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