Reforms in the defense sector: Parliament approves redistribution of military personal income tax

On Wednesday, November 8, the Verkhovna Rada of Ukraine adopted in the second reading an important draft law on the redistribution of military personal income tax (PIT). This initiative is aimed at supporting defense reforms and is an important step in strengthening national security.

According to MP Yaroslav Zheleznyak, the draft law No. 10037 was adopted by 253 votes. This draft law is of great importance for the budget for 2024, as it is expected to generate UAH 214.7 billion.

The draft law stipulates that from October 1 to December 31, 2023, military personal income tax will be distributed between the state and local budgets in a 50% to 50% ratio. Half of these funds will be allocated to the State Service for Special Communications and Information Protection for the needs of drones (UAH 13 billion), and the other half to the Ministry of Defense for the purchase of artillery systems (UAH 13 billion).

From January 1 and until December 31 of the year in which martial law is terminated or lifted, military PIT will be distributed as follows: 10% will be allocated to the security and defense sector entities for automatic distribution among military units in proportion to the PIT paid (about UAH 10 billion). At the same time, the "regular personal income tax" will remain in local communities in the amount of 64%. At least 4% of this tax will be used to make payments for heat production and support enterprises engaged in heat production, supply, centralized cold water supply and sewage.

The Prime Minister of Ukraine Denys Shmyhal noted that the adoption of this draft law will increase spending on defense and the purchase of drones by UAH 96 billion in 2024. At the same time, local budgets will also receive a significant amount of money, which will allow them to address the urgent needs of communities.

This draft law is an important step in supporting the Ukrainian defense forces and implementing defense reforms, which will help strengthen the country's national security and defense capabilities.