Payroll taxes in Ukraine that are of key importance to employers include Personal Income Tax (18%), Military Tax (1.5%), Unified Social Contribution (22%), and Single Tax for Individual Entrepreneurs. Learn more about the processes for setting up payroll, calculating taxes, submitting payments compliantly, and adhering to due dates in Ukraine.
Capital City
Kyiv
Currency
Hryvnia
(
₴
)
Timezone
EET
(
GMT +2
)
Payroll
Semi-monthly
Employment Cost
22%
Understanding payroll taxes in Ukraine is essential for businesses of all sizes—from startups to large enterprises. Employers are responsible for withholding and remitting various taxes, including personal income tax, military tax, and social contributions. Compliance is crucial; failure to adhere to tax regulations can result in penalties, audits, and strained employee relations. This guide aims to provide clarity on the key aspects of payroll taxes in Ukraine, covering calculations, deadlines, and filing procedures.
1 January - 31 December is the 12-month accounting period that businesses in Ukraine use for financial and tax reporting purposes.
The payroll cycle in Ukraine is usually semi-monthly, with employees being paid between the 15th and 20th of each month.
As of January 1, 2025, Ukraine's minimum wage is set at UAH 7,500 per month. This rate applies to all workers, and the government periodically reviews and adjusts the wage.
Ukranian law does not include provisions for 13th salaries.
In Ukraine, payroll calculations encompass several components:
Employers must ensure accurate calculations to determine the net salary and fulfill tax obligations.
Ukraine's payroll tax system includes various taxes, each with specific regulations:
Rate: 18% on gross income.
Purpose: Funds state budget expenditures.
Deadline: Withheld monthly and remitted to tax authorities by the 20th of the following month.
Rate: 1.5% on gross income.
Purpose: Supports military funding.
Deadline: Withheld monthly and remitted to tax authorities by the 20th of the following month.
Rate: 22% of gross salary, capped at a certain amount (e.g., UAH 160,000 as of 2025).
Purpose: Provides social insurance benefits.
Deadline: Paid monthly by the 20th of the following month.
Rates: Vary by group:
Deadline: Payments due by the 20th of each month for Groups I and II; Group III pays quarterly.
Setting up a payroll system in Ukraine involves several steps:
Select a payroll software or service provider to manage calculations and filings. Options include:
Collect necessary documentation:
Ensure all information is accurate to facilitate smooth payroll processing.
Efficient payroll processing involves the following steps:
Methods: Use digital systems or manual logs to track working hours.
Gross Salary: Determine based on employment contract.
Deductions: Apply PIT, military tax, and USC as per regulations.
Format: Include gross salary, deductions, and net pay.
Distribution: Provide payslips electronically or in print.
Reports: File monthly reports detailing wages and taxes withheld.
Deadlines: Submit by the 20th of the following month.
Methods: Transfer salaries to employees' bank accounts.
Timing: Ensure payments are made promptly to maintain employee satisfaction.
Employers must submit payroll taxes through the following methods:
Understanding the tax obligations for both employers and employees is crucial when operating in Ukraine's business landscape. This section explains how taxes and statutory fees affect payroll and individual earnings in Ukraine.
Employer payroll contributions are generally estimated at an additional 22% on top of the employee salary in Ukraine.
In Ukraine , the typical estimation for employee payroll contributions cost is around 2.1%.
In Ukraine, the individual income tax rate is a flat 18%, calculated uniformly across all income levels.
In Ukraine, the old-age pension is granted to men at 60 with 35 years of coverage, and women at 60 with 30 years of coverage. Hero-mothers with 5 or more children can retire at 50, along with specific caregiving roles or Chernobyl accident contributors. Partial or deferred pensions are also possible under specific conditions.
Global employers operating in Ukraine often encounter unique payroll challenges that can affect compliance and efficiency, like navigating evolving tax laws and managing employee data. With a need for real-time accuracy, modern organizations must develop strategies to overcome these challenges effectively. Below, we explore some of the most common payroll hurdles and provide actionable solutions to streamline payroll processes in Ukraine.
Maintaining accurate global payroll reports is often challenging due to currency exchange complexities, data integration issues, and the need to keep employee information up-to-date – including tax information, hours worked, leave balances, and any changes in salary or job status. Generating accurate reports is easy with a comprehensive payroll automation tool that consolidates fragmented data sources, and can keep track of employee payments and deductions.
In Ukraine, tax laws and compliance regulations can change frequently, presenting a significant challenge for global employers. Monitoring updates to federal, state, and local tax codes is crucial to avoid non-compliance and costly penalties, but requires significant time and resources. Partnering with local experts or a reputable global HR platform is an effective way to maintain compliance. These services can help employers stay compliant with evolving regulations while freeing up time for more strategic work.
Managing payroll across multiple vendors often leads to fragmented data and inefficiencies, making it difficult to consolidate analytics. These challenges can hinder decision-making, especially when trying to gain a clear view of workforce costs and trends. To address this, organizations can invest in a centralized payroll management system that unifies data from multiple vendors. A consolidated platform simplifies payroll tracking, ensures data accuracy, and provides actionable insights into payroll expenditures.
Global companies are prone to using multiple HR or payroll systems across regions, which can easily lead to fragmented payroll data, increasing the risk of delays and errors in employee compensation. To combat this, seamless integration between payroll and other systems is critical.
Payroll management systems that connect with existing HR and financial platforms can help streamline workflows by reducing manual inputs and ensuring that all departments operate with up-to-date, accurate information. In turn, this helps guarantee on-time, accurate payroll, boosting employee satisfaction.
A global payroll management platform is a software solution designed to streamline and automate the payroll processes for organizations with employees across multiple countries. It helps ensure accurate and timely payment while maintaining compliance with legal and regulatory requirements in Ukraine.
Expanding globally is an exciting milestone for any company, but it comes coupled with complex payroll challenges. It doesn’t have to be complicated. At Playroll, our easy-to-implement global payroll management software combines automation with hands-on support to make global payroll truly simple. Here's how Playroll helps:
Disclaimer
THIS CONTENT IS FOR INFORMATIONAL PURPOSES ONLY AND DOES NOT CONSTITUTE LEGAL OR TAX ADVICE. You should always consult with and rely on your own legal and/or tax advisor(s). Playroll does not provide legal or tax advice. The information is general and not tailored to a specific company or workforce and does not reflect Playroll’s product delivery in any given jurisdiction. Playroll makes no representations or warranties concerning the accuracy, completeness, or timeliness of this information and shall have no liability arising out of or in connection with it, including any loss caused by use of, or reliance on, the information.
ABOUT THE AUTHOR
Milani Notshe
Milani is a seasoned research and content specialist at Playroll, a leading Employer Of Record (EOR) provider. Backed by a strong background in Politics, Philosophy and Economics, she specializes in identifying emerging compliance and global HR trends to keep employers up to date on the global employment landscape.
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In Ukraine, payroll taxes are calculated by determining both employee and employer contributions. Employees are subject to Personal Income Tax (PIT) at a flat rate of 18% on their gross income. Additionally, a Military Tax of 1.5% is applied to the same income. Employers are responsible for withholding these taxes from employees' salaries and remitting them to the tax authorities. Employers also contribute to the Unified Social Contribution (USC), which is 22% of each employee's gross salary, subject to a monthly cap based on the minimum wage. The total cost to the employer includes the employee's gross salary plus the employer's portion of the USC.
Employers in Ukraine have several options for managing payroll. One option is to handle payroll internally, which involves setting up and maintaining payroll systems, ensuring compliance with local tax laws, and managing all related administrative tasks. Another option is to outsource payroll to a third-party provider who specializes in Ukrainian payroll services, ensuring compliance and reducing administrative burdens. Additionally, companies can use an Employer of Record (EOR) service, which allows them to employ staff in Ukraine without establishing a legal entity. An EOR manages all aspects of employment, including payroll, compliance, and tax filings, on behalf of the employer.
The key elements of payroll in Ukraine include determining the employee's gross salary, calculating and withholding applicable taxes (such as PIT and Military Tax), and making employer contributions to the USC. Employers must also ensure compliance with local labor laws, including adhering to minimum wage requirements, providing statutory benefits, and maintaining accurate payroll records. Additionally, employers are responsible for submitting payroll tax reports to the tax authorities and making timely tax payments.
In Ukraine, the payroll tax system comprises several components. Employees are subject to a Personal Income Tax (PIT) at a flat rate of 18% and a Military Tax of 1.5%, totaling 19.5% in employee contributions. Employers contribute 22% of each employee's gross salary to the Unified Social Contribution (USC), which funds social insurance programs. Therefore, the total payroll tax burden for employers is approximately 41.5% of each employee's gross salary, combining both employee and employer contributions. It's important to note that the USC is subject to a monthly cap based on the minimum wage, which may limit the maximum contribution amount.
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