19:41 13.09.2023

Ukraine wants to reduce tax burden on life and health insurance for volunteers - Shuliak

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Bill No. 10040 on amendments to the Tax Code of Ukraine on supporting volunteer activities in martial law conditions was registered in the Verkhovna Rada on Wednesday, the purpose of which is to introduce favorable tax legislation in cases of life and health insurance of volunteers by non-profit organizations that attract them to their activities.

Head of the parliamentary committee on the organization of state power, local self-government, regional development and urban planning Olena Shuliak (the Servant of the People party) told the Interfax-Ukraine agency.

She noted that now, according to the law, organizations and institutions that attract volunteers have the right to insure their life and health for the period of their volunteer activities. However, according to the provisions of the Tax Code, amounts subject to personal income tax include, in particular, amounts of insurance premiums under life and health insurance contracts for volunteers.

“When a non-profit organization attracts volunteers, it is a tax agent for personal income tax when providing the volunteer with income in the form of paid insurance premiums, and is also obliged to accrue, withhold and pay personal income tax to the budget from such “income” of the volunteer. In addition, such payments for the volunteer’s insurance are subject to taxation with war tax. Such provisions of tax legislation do not correspond to the world practice of regulating the relevant area, and are also one of the main reasons why in Ukraine there is no practice of insuring the life and health of volunteers by non-profit organizations and institutions,” the MP noted.

International experience in insuring volunteers indicates that such insurance is necessary subject to tax mitigation, explains Shuliak.

The bill proposes to exclude from the calculation of a taxpayer’s total monthly (annual) taxable income:

one-time monetary assistance in the event of death or disability of a volunteer as a result of injury received while providing volunteer assistance in the implementation of measures necessary to ensure the defense of Ukraine;

expenses of a non-profit organization that attracts volunteers to its activities, or another non-profit organization acting as an insurer, for insurance payments within the limits of life and health insurance contracts for volunteers for the period of their volunteer activities.

“This will make it possible to actively attract funds from foreign non-governmental organizations to finance projects for life and health insurance of volunteers by Ukrainian taxpayer insurance companies, which fill the state budget with tax payments. Therefore, the adoption of this bill will have a positive impact on the budget,” Shuliak said.

In her opinion, such changes will have a positive impact on the development of the volunteer movement in Ukraine during the war and post-war periods. The proposed changes will be one of the elements of bringing the practice of organizing volunteer activities to European standards and will determine the conditions for minimum social guarantees for volunteers who may suffer in any corner of Ukraine.