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Businesses must reconfirm their criticality status for employee bookings by 28 February

27/ 11/ 2024
  The European Business Association held a meeting with Vitaliy Kindrativ, Deputy Minister of Economy of Ukraine, to discuss the new procedure for exempting conscripted employees, as outlined in Government Resolution No. 1332. According to Vitaliy Kindrativ, all enterprises must reconfirm their critical status by February 28, 2025, based on updated criticality criteria to retain the ability to exempt conscripted employees. During this period, the current exemptions and critical status will remain valid. However, companies will only be able to exempt new employees after reconfirming their status. Moving forward, all exemptions for employees of critical enterprises will be processed via the Diia portal. To do so, businesses must reapply for critical status under the new criteria and submit the necessary documents through Regional Military Administrations (RMA), ministries, or relevant central executive bodies. To qualify for critical status, enterprises must meet at least three criteria, two of which are mandatory for all. The two mandatory criteria are no tax arrears and an average salary at the enterprise of at least 20,000 UAH, as well as a similar salary for the exempted employee, for the most recent reporting period (currently quarterly; this may change to monthly after tax legislation amendments come into effect). The third criterion must be one of the general, regional, or sector-specific criteria, which must be developed by the relevant ministries or regional military administrations (RMAs) within 10 days of the resolution’s adoption. At the same time, sector-specific and regional criteria must be approved by the Ministry of Defence and the Ministry of Economy. The absence of tax arrears for a business can be confirmed with a certificate from the State Tax Service. The relevance of the critical status will be automatically verified monthly through a data exchange with the Pension Fund and the State Tax Service. The ability to exempt 100% of employees currently applies to enterprises in the fuel-energy and defence-industrial sectors. Other companies are subject to a 50% quota. Non-resident companies will submit lists to the Ministry of Economy, and exemptions will be processed through the Ministry rather than via Diia. The exemption base includes all conscripted employees of the enterprise. The EBA is grateful for the exclusion from the final version of the exemption procedure of a provision that would have excluded conscripted employees with deferments (e.g., due to caring for a person with disabilities or being part of a large family) from the total count of conscripts at the enterprise. Additionally, part-time employees or those already exempted by another company will not be included in the base. Employees who have been with the company for less than three months are also currently ineligible for exemption; this period will be reduced to one month following the implementation of tax law changes. The EBA thanks the Ministry of Economy for understanding the urgency of resolving this issue and is ready to join discussions and provide business proposals. Exemptions for employees can be revoked, but without specific grounds (e.g., termination), this can only be done once a month. We appreciate the constructive dialogue with Vitaliy Kindrativ and the Ministry of Economy team and look forward to further productive cooperation!

The European Business Association held a meeting with Vitaliy Kindrativ, Deputy Minister of Economy of Ukraine, to discuss the new procedure for exempting conscripted employees, as outlined in Government Resolution No. 1332.

According to Vitaliy Kindrativ, all enterprises must reconfirm their critical status by February 28, 2025, based on updated criticality criteria to retain the ability to exempt conscripted employees.

During this period, the current exemptions and critical status will remain valid. However, companies will only be able to exempt new employees after reconfirming their status.

Moving forward, all exemptions for employees of critical enterprises will be processed via the Diia portal. To do so, businesses must reapply for critical status under the new criteria and submit the necessary documents through Regional Military Administrations (RMA), ministries, or relevant central executive bodies. To qualify for critical status, enterprises must meet at least three criteria, two of which are mandatory for all.

The two mandatory criteria are no tax arrears and an average salary at the enterprise of at least 20,000 UAH, as well as a similar salary for the exempted employee, for the most recent reporting period (currently quarterly; this may change to monthly after tax legislation amendments come into effect).

The third criterion must be one of the general, regional, or sector-specific criteria, which must be developed by the relevant ministries or regional military administrations (RMAs) within 10 days of the resolution’s adoption. At the same time, sector-specific and regional criteria must be approved by the Ministry of Defence and the Ministry of Economy. The absence of tax arrears for a business can be confirmed with a certificate from the State Tax Service. The relevance of the critical status will be automatically verified monthly through a data exchange with the Pension Fund and the State Tax Service.

The ability to exempt 100% of employees currently applies to enterprises in the fuel-energy and defence-industrial sectors. Other companies are subject to a 50% quota. Non-resident companies will submit lists to the Ministry of Economy, and exemptions will be processed through the Ministry rather than via Diia.

The exemption base includes all conscripted employees of the enterprise. The EBA is grateful for the exclusion from the final version of the exemption procedure of a provision that would have excluded conscripted employees with deferments (e.g., due to caring for a person with disabilities or being part of a large family) from the total count of conscripts at the enterprise.

Additionally, part-time employees or those already exempted by another company will not be included in the base. Employees who have been with the company for less than three months are also currently ineligible for exemption; this period will be reduced to one month following the implementation of tax law changes.

The EBA thanks the Ministry of Economy for understanding the urgency of resolving this issue and is ready to join discussions and provide business proposals.

Exemptions for employees can be revoked, but without specific grounds (e.g., termination), this can only be done once a month.

We appreciate the constructive dialogue with Vitaliy Kindrativ and the Ministry of Economy team and look forward to further productive cooperation!

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