Ukrainian President Petro Poroshenko has enacted the bill amending the Tax Code of Ukraine with respect to exemption of pensions from taxation passed by the Verkhovna Rada on June 2, 2016, according to a posting on the president's website.

The head of state said that the authorities had managed to save the country from default in 2015 and achieve macro-financial stability of the economy in early 2016.

"At the cost of tremendous efforts, we have managed to break the negative trend of decline in the economy and Ukraine's GDP, which lasted 14 quarters," Poroshenko noted.

"In the first quarter of 2016, for the first time in 14 quarters, we observe the economic growth. We are confident that this trend will be continued, because we have growth in foreign investment and attract new investors," he said.

All these factors provide an opportunity not only to ensure normal activity of the country, but also to abolish fiscal pressure on pensions, Poroshenko said.

“These first steps allow us to ensure not only the funding of the Armed Forces, but also the protection of pensioners – those who need assistance most. This law abolishes taxation of pensions," the president said.

As reported, the bill was backed by 274 lawmakers.

For pensions equaling more than 10 subsistence wages for persons who lost ability to work the tax rate would be 18% for the sum than exceeds this amount.

According to information from the website of the Finance Ministry, from May 1, 2016 the subsistence wage for persons who lost ability to work was set at UAH 1,130 and from December 1, 2016 it will grow to UAH 1,208. Thus, the smallest pension exempted from taxation would be UAH 11,300 and from December 1, 2016 – UAH 12,800.