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Tax Relief Measures Under Martial Law in Ukraine

The ongoing massive Russian aggression against Ukraine has severely affected all aspects of the country’s life. The operation of numerous companies and business processes has been disrupted by both military action and legal restrictions imposed in the context of martial law (first introduced by Decree of the President of Ukraine No. 64/2022 dated February 24, 2022 for a period of 30 days until March 26, 2022, and extended for another 30 days by Decree No. 133/2022 of March 14, 2022).


In order to address the severe difficulties that Ukrainian and foreign businesses are currently facing, the Government has provided a number of tax relief measures. These measures, as embodied in Laws of Ukraine No. 2118-IX dated March 3, 2022, No. 2120-IX dated March 15, 2022, No. 2139-IX dated March 15, 2022, are meant to apply only for the duration of martial law and automatically expire thereafter, unless the Laws explicitly provide otherwise.


No liability for tax violations

  • No liability shall apply for tax violations if the tax payer was objectively prevented from duly complying with their tax obligations. With respect to unified social tax, the liability-free period extends to three months after the end of martial law.

  • Exceptions apply if violations were established by a tax audit permitted under martial law (audits regarding VAT refund and factual audits).

  • Liability for failure to use cash registers (in particular, by private entrepreneurs) and other violations of the laws on cash registers does not apply, except for transactions with excisable goods.

  • Affected taxpayers have to comply with their respective obligations within three months after the end of martial law.

  • The provisions on compensation for damage caused to taxpayers by decisions, actions or omissions of the Tax Office do not apply.

Suspension of terms

  • All terms (periods) provided by tax laws, including limitation periods, are suspended.

Tax audit moratorium

  • Tax audits are not conducted, except for audits related to VAT refund and factual audits. As regards unified social tax, audits are also not conducted three months after the end of martial law.

  • At the same time, the tax audit moratorium imposed earlier due to COVID-19 does not apply during martial law.

VAT-, excise- and customs-free transactions for defense purposes

  • Voluntary free-of-charge transfers or forced seizure of funds or property and the provision of free-of-charge services to the Armed Forces and some other authorities and institutions for defense purposes as well as to healthcare institutions are not subject to VAT.

  • Free-of-charge transfers or forced seizure of fuel or other excisable goods for the benefit of the Armed Forces and some other authorities and institutions for defense purposes as well as of healthcare institutions, their provision as humanitarian help shall not be subject to VAT and excise tax.

  • The importation to Ukraine and supply on its territory of individual protective ammunition (armored vests, helmets, etc.), goods for defense purposes, medicines in connection with repelling the Russian aggression and with martial law is VAT free.

  • The destruction of a taxpayer’s assets/goods due to force majeure (military hostilities) shall not inflict VAT liabilities.

  • Customs duties do not apply to imported food products of social significance, as well as medicines and medical devices for which prices are fixed.

Other VAT and excise tax preferences and exemptions

  • Purchasers can claim a VAT credit and refund without registration of a tax invoice by the supplier. Within six months after the end of martial law, respective VAT invoices shall be registered and adjustments made.

  • VAT rate applicable to fuel supply transactions shall be 7%.

  • Excise tax rate applicable to fuel supply transactions shall be 0%.

  • Until December 31, 2024, the applicable VAT rate to domestic transportation of passengers and cargo by air transport shall be 7%.

  • No interest rate applies to VAT not timely refunded to the taxpayer from the state budget.

Personal income tax preferences and exemptions

  • Donations to members of the Armed Forces, other military units, civil defense enterprises and forces immediately involved in repelling the Russian aggression, as well as to natural persons residing in active combat areas or persons displaced from such areas are not subject to personal income tax.

  • Other donations granted during martial law to natural persons who suffered from the Russian aggression are free from personal income tax.

  • Tax rebates and deductions are provided for individuals, private entrepreneurs and self-employed persons who donate for defense purposes in 2022.

Social tax preferences and exemptions

  • For the duration of martial law and 12 months thereafter, individual entrepreneurs (including payers of unified tax), self-employed persons as well as individual farm members are relieved from payment of social tax.

  • Payers of unified tax (simplified taxation, Groups II and III) are released from social tax for their employees conscripted to the Armed Forces during mobilization. For such employees, social tax contributions shall be reimbursed by the state budget, for which purpose employers have to file tax calculations.

Land, environmental tax and rent preferences and exemptions

  • No land tax and land rent are charged for land plots located in active combat areas, occupied territories, for land plots contaminated with explosives or underlying fortification structures (the minimum tax liability for the named land plots is not due in 2022 and 2023).

  • No environmental tax is charged in 2022 for objects of taxation located in active combat areas or occupied territories.

  • Differentiated stimulating rent payments for the extraction of natural gas effective as of March 31, 2022 shall apply until March 31, 2032 without any increase.

Extended simplified taxation for businesses (effective starting April 1, 2022)

  • Payers of unified tax belonging to Groups I and II are relieved from payment of the tax and tax reporting.

  • The annual income threshold for taxpayers belonging to Group III is increased to UAH 10 billion. The number of employees employed by such taxpayers is unlimited.

  • The following entities and individuals cannot enroll on simplified taxation:

- Engaged in gambling, lotteries, betting, currency exchange, manufacture of and trade in excisable goods (with some exceptions), the extraction of and trade in mineral resources.

- Financial institutions, securities registrars.

- Branches and representative offices of entities that are not payers of unified tax.

- Non-residents.

  • The applicable tax rate is 2% on income (turnover), as opposed to profit (income minus expenses plus adjustments).

  • The general corporate profit tax rate of 18% chargeable on profit does not apply.

  • Enrolled taxpayers are relieved from VAT, land and real estate tax.

  • The reporting period shall be the calendar quarter.

  • Enrolled entities shall make monthly advance tax payments.

  • An eligible taxpayer can file an enrollment application until the last day of the month preceding a reporting period (calendar quarter).

  • A newly established business can apply within 10 calendar days after registration so that it can benefit from simplified taxation starting the day of registration.

  • After the end of martial law, those who enrolled on simplified taxation with the 2% tax rate automatically return to their previous taxation system.

Other important provisions

  • The Tax Office shall provide digital services and accept electronic documents via taxpayers’ electronic accounts on business days between 8:00 a.m. and 6:00 p.m.

  • The deductibility restriction for corporate profit tax purposes (4% of the taxable profit for the previous year) does not apply to certain donations for defense and healthcare.

  • The head of a territorial military administration can order an immediate release of encumbered assets from tax lien.

  • Importers of tobacco goods can, as an exception, order to print excise marks abroad in case the Ukrainian Tax Office is not able to provide them. The affected tobacco goods shall be sold not later than three months after the end of martial law.

IMPORTANT AMENDMENTS TO OTHER LAWS


No liability under loan agreements


During the period of martial law and 30 days thereafter, neither penalties / fines nor default interest apply under loan agreements for failure of the borrower to comply with their payment obligations.


Limitation periods suspended

  • The limitation periods provided by the Civil Code of Ukraine are suspended.

Alcohol, tobacco, and fuel licenses extended

  • Alcohol, tobacco and fuel licenses expiring during martial law, including due to failure to pay license fees, shall be considered extended. The license holder shall apply for extension / pay license fees within 30 days after the end of martial law.

Liquidity and capital requirements to banks relaxed

  • Banks are allowed not to comply with liquidity requirements during martial law and four months thereafter.

  • Banks are not allowed to issue blank loans during martial law.

  • Banks are allowed not to comply with the requirements on regulated and authorized capital during martial law and six months thereafter.

Mortgaged property protected from foreclosure

  • During martial law and 30 days thereafter, mortgaged property owned by individuals is protected against foreclosure through: acquisition of title by the mortgagee; forced sale by the mortgagee; sale through an electronic auction.

  • In addition, no eviction of residents from mortgaged residential objects is permitted.

Financial monitoring: sources of funds not examined

  • During martial law, banks do not examine the sources of funds deposited by clients exceeding the financial monitoring threshold of UAH 400,000.

  • However, outbound transactions with such funds are restricted (mainly, for defense purposes).

Download PDF here.


This publication is for informational purposes only. If you would like to learn more or seek legal advice, please contact one of the following or your usual Nobles contact:




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