Who and how much will have to pay starting next year, and for whom the right to not pay will remain – read in the overview by journalist RBK-Ukraine Alik Sakhn. This is reported by Kontrakty.UA.
Since March 1, 2022, due to the Russian invasion, the Ukrainian authorities introduced a grace period for individual entrepreneurs regarding the payment of the single social contribution (SSC). During the state of martial law, individual entrepreneurs were allowed not to pay the SSC. However, this exemption has been canceled in the state budget for 2025, meaning that almost all entrepreneurs will have to pay the social contribution.
What is changing
The single social contribution is a payment made by all employers and self-employed individuals. The SSC is directed towards funding the Pension Fund, medical insurance, unemployment benefits, and compensation in case of accidents. Due to the large-scale war, individual entrepreneurs were allowed not to pay the SSC for themselves during the martial law period and for an additional 12 months after its conclusion.
Currently, the only mandatory payment remains the SSC by entrepreneurs for their hired employees – 22% of the SSC based on the minimum salary for regular employees and 8.41% for employees with disabilities. If an individual entrepreneur does not pay the SSC for themselves, they will not accumulate pensionable service. Therefore, entrepreneurs are exempt from fines and penalties for non-payment of the SSC during the martial law period and for one year after its conclusion. Additionally, there is no need to submit an SSC annex to the annual report.
However, the state budget for 2025 indicates that this exemption will be canceled, thus reinstating the mandatory payment of the SSC for self-employed individuals and individual entrepreneurs under simplified and general taxation systems. Although the final provisions of the law retain the option to not pay the SSC. Consequently, the cancellation of the SSC exemption will take effect over the next year, and in 2026, it may be reinstated if the deficit of the Pension Fund can be reduced.
What is the maximum tax base
The law changes the maximum base for calculating the single social contribution, meaning the maximum income amount from which the SSC of 22% is paid. Currently, it is set at 15 minimum salaries, which amounts to 120,000 UAH (15 x 8,000 UAH). Thus, the maximum possible amount of SSC now totals 26,400 UAH per month, or 316,800 UAH per year.
However, starting in 2025, the SSC calculation base will be increased to 20 minimum salaries – up to 160,000 UAH. Therefore, the maximum amount of the single social contribution will be 35,200 UAH per month. Annually, an individual entrepreneur will pay 422,400 UAH.
These changes are significant for several categories of taxpayers. In particular, for employers who pay a high official salary – over 160,000 UAH. This limit will also be considered by individual entrepreneurs under the general system who pay SSC based on profit.
How much will need to be paid
Individual entrepreneurs of all groups pay the single social contribution at a rate of 22%. However, the entrepreneur independently chooses the amount (calculation base) from which they will deduct the contribution. This amount cannot be less than the minimum salary. If the entrepreneur wishes, they can deduct the SSC from a higher amount.
The minimum salary as of January 1, 2024, was 7,100 UAH, so individual entrepreneurs paid 22% of this amount, specifically 1,562 UAH per month, or 4,686 UAH per quarter, or 18,744 UAH per year. From April 2024, the minimum wage was raised to 8,000 UAH, so starting from the third quarter (July-September), the payment will need to be 1,760 UAH per month, 5,280 UAH per quarter, or 21,120 UAH per year.
Since the minimum wage will remain at 8,000 UAH as of January 1, 2025, individual entrepreneurs of the first, second, and third tax groups will pay at least 1,760 UAH in SSC per month.
Important nuance. If the President of Ukraine signs the tax increase law (bill No. 11416-d), then in 2025 the amounts of tax payments for individual entrepreneurs will significantly increase.
Examples of tax payments for different groups of individual entrepreneurs (in case of tax increases)
Individual entrepreneurs of Group I: in 2024, they paid 302.80 UAH in single tax. In 2025, they will pay 302.80 UAH in single tax, 800 UAH in military tax (10% of the minimum wage), and 1,760 UAH in SSC.
Individual entrepreneurs of Group II: the single tax will increase from 1,420 UAH in 2024 to 1,600 UAH in 2025. Additionally, they will pay 800 UAH in military tax and 1,760 UAH in SSC.
Individual entrepreneurs of Group III: they paid 5% in single tax on turnover, and starting in 2025, they will also pay 1% in military tax and 1,760 UAH in SSC.
What are the limits and penalties
Next year, the turnover limits for individual entrepreneurs will also change, but not significantly. Recall that this is the maximum amount of money that an entrepreneur can earn in a year to remain on the simplified tax system. If an entrepreneur earns more than these limits, they must switch to the general tax system or change their group.
Thus, the limits will change as follows:
- Group I – in 2024 the limit is set at 1,185,700 UAH, and from 2025 – 1,336,000 UAH.
- Group II – in 2024 the limit is set at 5,921,400 UAH, and from 2025 – 6,672,000 UAH.
- Group III – in 2024 the limit is set at 8,285,700 UAH, and from 2025 – 9,336,000 UAH.
If an individual entrepreneur has not paid or has partially paid the SSC by the 20th of the month following the quarter for which the single contribution is due, a penalty is applied. If the final payment date falls on a weekend, then payment must be made by the 18th or even the 17th.
For late payments, the following sanctions apply:
- a one-time penalty payment of 20% of the unpaid amount;
- 0.1% of the amount for each day of delay in payment.
Considering that for 2025 the minimum SSC for individual entrepreneurs amounts to 5,280 UAH per quarter, the one-time penalty equals 1,056 UAH, plus 5.28 UAH daily until the overdue amount is settled.
Who retains exemptions from the SSC payment
Currently, all individual entrepreneurs retain the right not to pay the single social contribution. However, starting in 2025, this right will remain only for six categories of individual entrepreneurs.
The first category – individual entrepreneurs under the general taxation system who do not engage in activities or do not earn income from which they are required to pay the SSC. They must submit a declaration with zero income for the year. The SSC exemption has been in effect for them since January 1, 2021.
The second category – individual entrepreneurs registered in temporarily occupied territories.
The third category – entrepreneurs who have a primary place of employment where the employer pays the SSC for them based on the minimum salary. In this case, the necessary insurance contribution is considered paid. This exemption has been in effect since January 1, 2021.
The fourth category – retirees by age or length of service.
The fifth category – individuals with disabilities of any group.
The sixth category – individual entrepreneurs and self-employed individuals who engage in independent professional activities. That is, individuals who combine entrepreneurship with professional activities, such as lawyers or notaries. They need to pay the SSC only once – either as an individual entrepreneur or as a self-employed individual.
Additionally, the single social contribution is declared together with the submission of the annual tax declaration once a year. This can be a declaration of property status or a declaration of single tax payment. If an entrepreneur closes their individual entrepreneurship, they submit an SSC report along with the liquidation declaration.