Starting from the 1st of January 2021, Ukrainian Parliament has increased the amount of minimum wage and minimum living wage in accordance with the new Law of Ukraine “On the State Budget of Ukraine for 2021”.
Minimum Salary
Starting January 1st 2021, the gross minimum wage for a Ukrainian citizen amounts UAH 6000, and UAH 6500 from December 1st 2021. This means that the employer has to pay minimum of:
- UAH 1,320 (from December 1st 2021: UAH 1,430) as social security tax to Tax Office (22% on the top of the salary);
- UAH 1,080 (from December 1st 2021: UAH 1,170) as personal income tax to Tax Office (18% from the gross salary);
- UAH 90 (from December 1st 2021: UAH 97.5) as military tax to Tax Office (1.5% from the gross salary);
- UAH 4,830 (from December 1st 2021: UAH 5,232.5) as net salary to the employee (gross minimum wage – personal income tax – military tax).
In total, the monthly burden for 1 employee amounts minimum UAH 7,320 (from December 1st 2021: UAH 7,930) (gross minimum salary plus social security tax).
Please note that standard minimum wage of foreign employees (with some exceptions, which include IT professionals, business owners, employees of a representative offices, for which minimum salary is the same as for a Ukrainian citizens) amounts 10 minimum wages for a Ukrainian citizen, which is UAH 6,000*10, namely UAH 60,000 (from December 1st 2021: UAH 6,500*10, namely UAH 65,000). Which means that:
- UAH 13,200 (from December 1st 2021: UAH 14,300) as social security tax to Tax Office (22% on the top of the salary);
- UAH 10,800 (from December 1st 2021: UAH 11,700) as personal income tax to Tax Office (18% from the gross salary);
- UAH 900 (from December 1st 2021: UAH 975) as military tax to Tax Office (1.5% from the gross salary);
- UAH 48,300 (from December 1st 2021: UAH 52,325) as net salary to the employee (gross minimum wage – personal income tax – military tax).
In total, the monthly burden for 1 employee amounts minimum UAH 73,200 (from December 1st 2021: UAH 79,300) (gross minimum salary plus social security tax).
Increase of minimum wage will also influence the amount of minimum social security tax payable in 2021 by private entrepreneurs on a Simplified Tax Scheme. According to law, the minimum amount of social security tax amounts 22 % of minimum wage set forth for the 1st of January of each year. Therefore, in 2021 minimum social security tax for private entrepreneurs amounts UAH 1,320 / per month.
Social Security Tax of Private Entrepreneurs
Change in minimum wage amount also influenced the amount of minimum and maximum amount of social security tax, payable by private entrepreneurs. Therefore:
- the minimum social security tax for private entrepreneurs starting from January 2021 amounts UAH 1,320 / per month (and starting from December 2021 – UAH 1,430) (i.e. 22 % from minimum wage);
- the maximum social security tax for private entrepreneurs as from January 1, 2021 amounts UAH 19,800 / per month (6000 x 15 x 22%), and starting from December 1, 2021 – UAH 21,450 / per month (6,500 x 15 x 22%).
Yearly Income Limit for Private Entrepreneurs on Simplified Tax Scheme
Please note that starting January 1st, 2021, new income limits will be set for private entrepreneurs. Income limits for private entrepreneurs are now linked to and based on the minimum wage set for the 1st of January of each year. For 2021:
- First (I) Group PE – 167 minimum wages (UAH 1,002,000 per year);
- Second (II) Group PE – 834 minimum wages (UAH 5,004,000 per year);
- Third (III) Group PE – 1167 minimum wages (UAH 7,002,000 per year).
Increase of Government fees
Additionally, as per the Law of Ukraine “On the State Budget of Ukraine for 2021”, the minimum living wage was increased to UAH 2,270. Please note that the minimum living wage is taken into account while calculating various payments to state budget, including number of fees for government services, including:
- Amendments to Companies Register:
- UAH 681 (0.3 living wages) fee for registration of amendments to the State Register of Legal Entities, Private Entrepreneurs and Public Formations in respect of Companies;
- UAH 227 (0.1 living wages) fee for registration of amendments to the state Register of Legal Entities, Private Entrepreneurs and Public Formations in respect of Private Entrepreneurs.
- Work permit government fees:
- UAH 4,540 (2 living wages) – government fee for issues of work permit for the period up to 6 months;
- UAH 9,080 (4 living wages) – government fee for issues of work permit for the period from 6 months up to 1 year;
- UAH 13,620 (6 living wages) – government fee for issues of work permit for the period from 1 year up to 3 years.
- Other governmental fees and penalties as defined by respective legislation.
Should you have any further questions or require assistance, please do not hesitate to contact us.