Finance Ministry proposes setting 0% individuals' income tax on minimum wages from Jan 1, 2016
The Ministry of Finance has proposed, as part of the ongoing tax reform, to set a zero tax rate on individuals' income for the whole amount of a minimum wage from January 1, 2016, Deputy Finance Minister Olena Makeyeva has said.
"Today only 50% of the minimum wage is not taxed in Ukraine – UAH 609 is subject to individuals' income tax at a rate of 0%. And from January 1 the entire minimum wage will not be taxed," she said in an interview with TV Channel 24.
According to Makeyeva, the expectations of businesses are primarily connected with a reduction of the payroll burden, which is currently 50%.
"In most European countries there is no such tax burden," she said.
The deputy minister said there are plans to reduce the size of social security tax, the average value of which now stands at 41%. The IMF proposed to lower the rate of social security tax to 28%, but the Ministry of Finance may reduce it even more if compensators are found. Makeyeva said that the reduction of social security tax by 1% will reduce budget revenue by UAH 5 billion.