Ukraine · Guide
Ukraine's headline corporate tax rate is 18%. Quoting only that number gets the answer wrong for most companies a foreign founder would set up, because Ukraine taxes companies four different ways and the choice between them is largely made at incorporation.
A trading company pays 18% on profit. A financial institution pays 25%, and a bank pays 50%. A small services company can pay 5% of turnover and never compute a profit at all. An IT company inside Diia City pays 9% only when it distributes, and pays its engineers under a payroll regime unlike anything else in the country. Same jurisdiction, four arithmetics.
Ukraine Corporate Tax: the Short Answer
| Regime | Rate | Base | Who it fits |
|---|---|---|---|
| General corporate income tax | 18% | Accounting profit, adjusted | Most trading and operating companies |
| Financial institutions, not insurers | 25% | Accounting profit | Since 1 January 2025 |
| Banks | 50% | Accounting profit | Temporary elevated rate |
| Single tax, group 3 | 5% + 1% levy, or 3% + 1% with VAT | Gross turnover | Small companies under the threshold |
| Diia City, Exit Capital Tax | 9% | Profit when distributed | Qualifying IT companies that reinvest |
| Diia City, general option | 18% | Accounting profit | Qualifying IT companies that distribute |
VAT is 20% and sits on top of all of these, as a separate registration with its own threshold.
For an IT company, the Diia City decision is worth more than the corporate rate decision. The saving lives in payroll, not in the profit line.
The general regime: 18%, and the rates that are not 18%
Corporate income tax is charged at 18% on accounting profit adjusted by the tax differences in the Tax Code. It applies unless you have actively elected something else.
- Reporting is quarterly or annual depending on prior year income.
- Losses carry forward and reduce future taxable profit.
- Transfer pricing applies to controlled transactions, including with related non-residents and counterparties in listed low tax jurisdictions.
- Thin capitalisation bites where debt to related non-residents exceeds equity by more than 3.5 times, or 10 times for financial institutions and leasing companies. The excess interest is added back, and carried forward until used.
The sector rates matter more than they look. A company whose activity is classified as financial services pays 25%, not 18%, and that classification is made on what you actually do rather than on how you describe it. If your model touches lending, payments or asset management, settle the classification before you model the tax.
The simplified system: 5% of turnover
Ukraine's single tax lets a qualifying company ignore profit entirely and pay a percentage of what it invoices. Legal entities use group 3.
| Without VAT | With VAT | |
|---|---|---|
| Single tax on turnover | 5% | 3% |
| Military levy on income | 1% | 1% |
| VAT registration | Not required | Required |
| Annual income ceiling, 2026 | UAH 10,091,049 | UAH 10,091,049 |
| Employees | No limit | No limit |
The 1% military levy is the line most summaries still omit. Legal entities on group 3 have paid it on income since 2025, on top of the single tax, and it is due within 10 calendar days of the deadline for the quarterly single tax return. The real cost of the simplified regime is therefore 6% of turnover, not 5%.
The 2026 ceiling is not an arbitrary figure either: it is 1,167 times the minimum wage, which at UAH 8,647 gives UAH 10,091,049. It moves every January because the minimum wage does.
Two traps before you elect it:
- The base is turnover, not margin. At a 20% net margin, 6% of turnover equals 30% of profit, which is well above 18%. The single tax wins for high margin services and loses for anything that resells.
- The ceiling is annual and hard. Crossing UAH 10,091,049 forces you off the regime, and the threshold moves every January with the budget law.
Certain activities are excluded outright, so check your actual activity codes rather than your description of the business.
Diia City: the regime IT companies come for
A special legal and tax regime for the technology sector, in force since 2022. By early 2026 it covered 4,559 resident companies contributing UAH 13.4 billion to the budget in the first quarter alone, up 68% year on year.
Who qualifies
The startup carve-out, which changes who this is for
Most English guides say Diia City is closed to teams under nine people. Since 1 January 2025 that is no longer true.
Under subparagraph 170.14-1.6 of the Tax Code, a startup resident may apply the 5% personal income tax rate and the minimum social contribution with fewer than nine specialists, provided the average monthly remuneration still meets the EUR 1,200 equivalent.
| Who | Residents meeting clause 3, article 5 of the Diia City law |
| Headcount | Fewer than nine permitted |
| Remuneration floor | Still applies, EUR 1,200 equivalent |
| Duration | Until 31 December of the calendar year following the year residency was obtained |
| After that | The ordinary nine specialist test resumes |
This turns Diia City from a scale decision into a founding decision. A four person team that clears the remuneration floor can enter the regime immediately and has until the end of the following calendar year to reach nine.
Exit Capital Tax at 9%, or corporate income tax at 18%
A resident chooses between them.
| Exit Capital Tax | General corporate income tax | |
|---|---|---|
| Rate | 9% | 18% |
| Trigger | Only when profit is distributed | On profit, as it arises |
| Effect | Reinvested profit is untaxed | Reinvestment is taxed |
| Fits | Companies funding growth | Companies paying out steadily |
The 9% option is an exit capital model, close in spirit to the Estonian system: keep the money in the company and there is nothing to pay. For a company reinvesting everything into headcount, that is genuine deferral, not a rate trick.
Payroll, where the money actually is
| Element | Diia City resident | Standard employer |
|---|---|---|
| Personal income tax | 5% | 18% |
| Military levy | 5% | 5% |
| Social contribution | 22% of the minimum wage, fixed | 22% of actual salary |
The fixed social contribution is the second saving and usually the larger one. A standard employer pays 22% on whatever the engineer actually earns; a Diia City resident pays 22% of the minimum wage regardless, so the gap widens with every hryvnia above it.
Residents can engage specialists on gig contracts, a contract type created for the regime, alongside ordinary employment contracts and contracts with sole traders. The 5% rate starts from the calendar month following the month residency is acquired.
Reservation from mobilisation, the reason Ukrainian employers care
For a company hiring in Ukraine, Diia City has a second value that has nothing to do with tax: it is a route to critical enterprise status, which allows employees to be reserved from mobilisation.
The rules were rewritten in 2026 and tightened:
- Membership alone stopped being enough on 2 June 2026. A Diia City resident now has to qualify for critical status on its own merits.
- The qualifying test is pay: an average monthly wage to engaged employees of at least the EUR 1,200 equivalent over the preceding six months, the same figure as the residency criterion.
- A Diia City resident with critical status can reserve up to 50% of its employees, provided they are officially employed rather than engaged as sole traders.
- From 1 September 2026, employees reserved at ordinary enterprises, outside Diia City, must be paid at least three minimum wages.
- Exceeding the reservation limit is grounds for losing critical status entirely, and the company has 10 business days to cancel the excess reservations through the state portal.
Two consequences follow for a foreign founder. Engaging your team as sole traders rather than employing them costs you reservation eligibility, which is a real retention argument in the Ukrainian labour market. And the EUR 1,200 floor now does double duty: it gates the tax regime and it gates the reservation route.
The cliff edges nobody puts on the brochure
This is the part that decides whether the regime is worth it in practice.
- EUR 240,000 per specialist per year. Above that, the excess is taxed at the ordinary 18%, and the specialist declares and pays it themselves.
- A month that misses the criteria costs you, not them. If in a given month the resident falls below nine specialists or below the EUR 1,200 average, it pays 18% personal income tax on its specialists for those months at its own expense.
- The headcount clawback. A resident that fails the average headcount test regularises at 18% for the last three months of the year following the year residency was acquired.
- The 90% test constrains diversification. Adding a non-qualifying revenue line can cost the regime.
- Transfer pricing still applies. Special regime status does not exempt controlled transactions.
Points 1 to 3 are why the EUR 1,200 floor should be read as a cost floor, not a target. Falling under it is not neutral, it is retroactively expensive.
Which regime fits which company
| Company | Likely regime |
|---|---|
| IT team of four, remuneration above EUR 1,200 | Diia City startup carve-out, then the full regime |
| IT company with 9+ specialists, reinvesting | Diia City, Exit Capital Tax at 9% |
| IT company with 9+ specialists, distributing | Diia City, general option at 18% |
| Small consultancy under the turnover ceiling | Single tax group 3 at 5% |
| Trading company with thin margins | General 18%, the single tax would cost more |
| Foreign group's local subsidiary | General 18%, with transfer pricing planning |
| Anything classified as financial services | 25%, and confirm the classification early |
VAT, briefly
Standard rate 20%, reduced rates for specific supplies, zero rate for exports. Registration is mandatory above the turnover threshold and voluntary below it.
For a services exporter, registration usually helps rather than hurts:
- Export supplies are zero rated, so you charge nothing on the invoice.
- Input VAT stays recoverable, so Ukrainian costs come back to you.
- The 3% single tax with VAT exists for exactly that shape of business.
- The cost is operational, not fiscal: monthly returns plus continuous tax invoice registration.
Filing obligations are in Ukraine company compliance.
What happens when the money leaves
The corporate rate is only half the answer for a foreign owner. Profit distributed to a non-resident shareholder meets a separate withholding tax at the border, reduced under Ukraine's network of around seventy effective treaties where the conditions are met, and sitting on top of that is a currency control layer with its own limits.
That arithmetic is in Ukraine withholding tax for non-residents.
The bottom line
Ukraine is not a low tax jurisdiction and does not pretend to be. It is a jurisdiction with one exceptional regime attached to it, and whether Ukraine makes sense for you is mostly whether you qualify for that regime.
The decisive number inside Diia City is 5% personal income tax with a capped social contribution, not the 9% corporate line. And since 2025 the door opens earlier than most guides say: a startup resident can enter with fewer than nine specialists, as long as it holds the EUR 1,200 average, until the end of the year following the year it joined.
Working out which regime your company lands in before you incorporate? The Ukraine formation package includes the election, or start with how to register a company in Ukraine.
Frequently asked questions
What is the corporate tax rate in Ukraine?
18% for most companies, on accounting profit adjusted for tax differences. Financial institutions other than insurers pay 25% since 1 January 2025, and a temporary 50% rate applies to banks' profits. Qualifying small companies can elect the single tax at 5% of turnover, and qualifying IT companies can pay 9% on distributed profit under Diia City.
What is Diia City?
A special legal and tax regime for the Ukrainian technology sector, in force since 2022 and covering 4,559 companies by early 2026. Residents choose between 18% corporate income tax and a 9% Exit Capital Tax on distributed profit, and pay specialists at 5% personal income tax with a social contribution fixed at 22% of the minimum wage.
Can a company with fewer than nine people join Diia City?
Yes, since 1 January 2025. Subparagraph 170.14-1.6 of the Tax Code lets a startup resident apply the 5% rate and the minimum social contribution below nine specialists, provided the EUR 1,200 average monthly remuneration is met. The right runs until 31 December of the calendar year following the year residency was obtained.
What is Exit Capital Tax?
The 9% Diia City option, charged only when profit is distributed rather than as it arises. Reinvested profit is untaxed, which makes it the right choice for a company funding its own growth and the wrong one for a company paying out steadily.
What happens if we drop below the Diia City criteria?
For any month in which the resident falls below nine specialists or below the EUR 1,200 average, it pays 18% personal income tax on its specialists for those months at its own expense. A failure of the average headcount test triggers regularisation at 18% for the last three months of the year following the year residency was acquired.
Is there a cap on the 5% rate?
Yes, EUR 240,000 per specialist per calendar year. Remuneration above that is taxed at the ordinary 18% rate, which the specialist declares and pays themselves.
What is the single tax threshold in Ukraine for 2026?
Annual income of UAH 10,091,049 for group 3, which is 1,167 times the minimum wage of UAH 8,647. Because it is set as a multiple of the minimum wage it moves every January, so verify the current year's figure.
Is the single tax always cheaper than 18% corporate tax?
No. The single tax is charged on turnover, not profit. At a 20% net margin, 6% of turnover equals 30% of profit, which is well above 18%. It works for high margin services and fails for resellers.
What is the VAT rate in Ukraine?
20% standard, with reduced rates for specific supplies and a zero rate for exports. Registration is mandatory above the turnover threshold and optional below it, and exporters often register voluntarily because zero rated sales still allow input VAT recovery.
Is Ukraine a tax haven?
No. Rates are ordinary European ones, transfer pricing and thin capitalisation rules apply, controlled foreign company rules exist, and Ukraine participates in international information exchange. What it has instead of low rates is Diia City, a sector regime with real entry conditions and real cliff edges.
Sources
- Tax Code of Ukraine: corporate income tax rates, the simplified system and VAT
- Tax Code of Ukraine, subparagraph 170.14-1.6: reduced personal income tax for Diia City startup residents
- Law of Ukraine on stimulating the development of the digital economy (Diia City), article 5
- PwC Worldwide Tax Summaries: Ukraine corporate income tax rates
The 18% standard rate, the 25% rate for financial institutions other than insurers effective 1 January 2025, the temporary 50% rate on banks' profits, the group 3 single tax rates and the Diia City regime reflect the Tax Code of Ukraine as of September 2026. The startup carve-out is subparagraph 170.14-1.6, in force since 1 January 2025. Sources disagree on the military levy applying to Diia City specialists: 2025 and 2026 sources converge on 5% under the general rules, while older pages still quote 1.5%; 5% is used here and should be reconfirmed. The single tax income threshold and every figure set in minimum wages or subsistence minimums move each January with the budget law. Effective rate comparisons are illustrative arithmetic. Diia City eligibility turns on the exact classification of your activities, which is a question for a Ukrainian tax advisor. Reservation from mobilisation and critical enterprise status follow the 2026 rules, including the changes effective 2 June and 1 September 2026; that framework has changed repeatedly and must be confirmed against the current government resolution before relying on it. This is not tax advice.