Personal income tax: rates and reporting in 2024

The procedure and rules for accrual and payment of personal income tax are regulated by Section IV of the Tax Code (hereinafter — the TC).

Knowing the rates, conditions, and types of taxable items will greatly facilitate tax accounting and simplify reporting to the State Tax Service.

Who are the taxpayers?

According to Article 162 of the TCU, the payment of personal income tax is the responsibility of resident and non-resident individuals, as well as tax agents, who receive taxable income. A tax agent is an entrepreneur or a legal entity that withholds, accrues and pays tax on employees' income. In other words, it is an employer that is equivalent to a personal income taxpayer by its status.

What is the object of taxation?

For a resident individual:

- total taxable income for the month or year;

- foreign income received outside the country;

- income earned in Ukraine that is taxed at the time of its accrual.

For a non-resident individual:

- income for the month or year received in Ukraine;

- income earned in Ukraine but taxed at the time of its payment. 

For the tax agent:

- income that is accrued and paid to an employee at the tax rate provided for in clause 168.1.1 of the TCU. 

Tax base

Taxable income is divided into total and net annual income.

The net annual taxable income also includes the income received by a person from business or professional activities.

Total taxable income includes any income paid to a person during the reporting period. This can be:

• salary,

• remuneration and bonuses.

But it is not included in the total taxable income:

• social assistance,

• scholarship,

• the cost of gifts, provided that this amount does not exceed 50% of the minimum wage.

The full list can be found in Article 164 of the TCU.

Personal income tax rates in 2024

18% is the basic tax rate, which is calculated in accordance with clause 167.1 of the TCU and applies to both Ukrainian citizens and non-residents. It is paid in the following cases:

• when calculating salaries, remuneration and bonuses;

• in the case of real estate taxation, if more than 2 such objects were sold during the year;

• sale of the 3rd or more vehicle during the year;

• in the case of passive income;

• for a portion of the foreign company's profits;

• for winnings and prizes;

• in case of dividends;

• when receiving income from professional or business activities abroad;

• on movable and immovable property that is inherited by a non-resident or inherited from a non-resident;

• when receiving income from a sole proprietorship under the general taxation system;

• when receiving income from independent professional activities.

9% is paid upon receipt:

• dividends by non-residents,

• income and payments resulting from the distribution of the total profit from the activities of a foreign company.

5% is paid in case of:

• sale of the second real estate object within one year;

• sale of the second vehicle within one year;

• sale of real estate, if 3 years have not passed since the acquisition of ownership;

• inheritance for persons outside the 1st or 2nd circle of kinship;

• receiving gifts, etc.

0% is charged on:

• inheritance inherited by close relatives;

• gifts from the official husband and wife;

• sale of 1 real estate property during the year;

• sale of 1 vehicle within one year.

The 0% rate means that no personal income tax is paid, but the person must declare all such income.

How to pay personal income tax in 2024

Article 168 of the TCU regulates the procedure for calculating, withholding and paying tax.

Personal income tax on total taxable income is calculated using the following formula:

According to this formula, the personal income tax on the minimum wage will be UAH 1,278.

Reporting on personal income tax?

1. Employers submit a report on the calculation and withholding of personal income tax from employee salaries, which reflects the calculation of income and tax.

2. An individual submits a tax return to the State Tax Service on his or her own, in which he or she discloses his or her income and property status. This document must be submitted annually, no later than May 1.

Timely payment of personal income tax will prevent you from receiving sanctions and fines from the State Tax Service during a tax audit or financial monitoring. Therefore, it is necessary to declare your income in accordance with the current legislation.