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The procedure and rules for calculating and paying personal income tax (PIT) are regulated by Chapter IV of the Tax Code (hereinafter referred to as the TC).

Knowing the rates, conditions, and types of taxable objects will significantly simplify tax accounting and streamline the submission of reports to the Tax Service.

Who are the tax payers?

According to Article 162 of the Tax Code, PIT payment is the obligation of both a resident and non-resident individual, as well as a tax agent, who receives taxable income. A tax agent is an entrepreneur or a legal entity that withholds, calculates, and pays the tax on the income of employees. That is, it is the employer, who is considered a PIT payer by status.

What is the object of taxation?

For a resident individual:

- the total income for the month or year, which is taxable;

- foreign income received outside the country;

- income received in Ukraine, which is taxed at the time it is accrued. 

For a non-resident individual:

- income for the month or year received in Ukraine;

- income received in Ukraine, but taxed at the time it is paid. 

For a tax agent:

- income that is accrued and paid to the employee at the tax rate provided by paragraph 168.1.1 of the Tax Code. 

Tax base

The income subject to taxation is divided into general and net annual taxable income.

Net annual taxable income also includes that received by an individual from carrying out business or professional activities.

The general taxable income includes any income paid to an individual during the reporting period. This can be:

• wages,

• bonuses and premiums.

However, the following is not included in the general taxable income:

• social assistance,

• scholarships,

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

A full list can be found in Article 164 of the Tax Code.

PIT rates in 2024

18% is the base tax rate, which is calculated according to paragraph 167.1 of the Tax Code and applies to both Ukrainian citizens and non-residents. It is paid in the following cases:

• when calculating wages, bonuses, and premiums;

• when taxing real estate if more than 2 such objects were sold during the year;

• sale of 3 or more vehicles during the year;

• when receiving passive income;

• on part of the profits of a foreign company;

• in case of winnings and prizes;

• when receiving dividends;

• when receiving income from professional or business activities abroad;

• on movable and immovable property inherited from a non-resident, or inherited from a non-resident;

• when receiving income for sole proprietorships on the general tax system;

• when receiving income from independent professional activities.

9% is paid when receiving:

• dividends from non-residents,

• income and payments from the distribution of total profits from a foreign company.

5% is paid in the case of:

• sale of the second real estate object during the year;

• sale of the second vehicle during the year;

• sale of real estate if no more than 3 years have passed since the acquisition of ownership;

• inheritance for individuals not in the first or second degree of kinship;

• receiving gifts, etc.

0% applies to:

• inheritance passed on to close relatives;

• gifts from a spouse;

• sale of 1 real estate object during the year;

• sale of 1 vehicle during the year.

The 0% rate means that PIT is not paid, but the individual must declare all such income.

How to pay personal income tax in 2024

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

PIT on the total taxable income is calculated according to the formula:

Thus, according to this formula, PIT from the minimum wage will be 1278 UAH.

PIT reporting?

1. Employers submit a report on the calculation and withholding of PIT from the employee's salary, which reflects the calculation of income and tax amounts.

2. An individual submits a declaration to the Tax Service, reflecting their income and property status. This document must be submitted annually, no later than May 1.

Timely payment of PIT will avoid penalties and fines from the Tax Service during a tax audit or financial monitoring. Therefore, it is necessary to declare your income in accordance with the current legislation.