The Law of Ukraine “On the State Budget of Ukraine for 2018” of 07.12.2017,No. 2246-VIII sets new dimensions of the basic minimum social standards in 2018.Consequently, business expenses to staff can grow significantly under the influence of these changes, and increases in taxes and fees expect individuals − entrepreneurs in the new year. More detailed legislative innovations are in the following.
Minimum wage
In 2018 the minimum wage will increase and amount to:
- monthly rate − 3 723.00 UAH/month;
- hourly rate − 22.41 UAH/hour.
Note that the minimum wage is the statutory minimum wage for the employee’s monthly (hourly) labor standard (Art. 95 of the Labor Code of Ukraine, hereinafter − Labor Code). Minimum official salary (wage rate) in staffing schedule is set in the amount not less than the living wage determined for able-bodied persons on January 1 of the calendar year (Part 6 of Art. 96 of Labor Code).
Consequently, the violation of the labor legislation is the establishment of wage rates (salary) in the staffing schedule, the size of which is lower than the living wage, rather than the minimum wage.
If the employee fulfils the monthly labor standard (worked all working days and hours), the employer is obliged to calculate the wage not less than the minimum. If the wage is accrued to a smaller extent (incl. because of the frequency of payments), it is necessary to pay extra to the level of minimum wage.
For failure to comply with the minimum state guarantee of wages, the employer will pay a fine of 10 times the minimum wage for each employee against whom a violation was committed (para. 4 of part 2 of Art. 265 of Labor Code).
An official, guilty of a violation, is threatened with a fine of 30 to 100 tax-free minimum incomes (para. 1 of Art. 41 of the Code of Ukraine on Administrative Offenses).
It should be recalled that in the case of forced collection of debt, the amount of fine to be doubled for officials.
Living wage
In 2018 the living wage rate will change in three periods of the year (Table 1).
Table 1. The living wage rate in 2018
|
No. |
Indicator |
Validity and amount |
||
|
January 1 - June 30, UAH |
July 1 - November 30, UAH |
December 1 - December 31, UAH |
||
|
1 |
Living wage rate per person |
1 700.00 |
1 777.00 |
1 853.00 |
|
2 |
children under 6 years old |
1 492.00 |
1 559.00 |
1 626.00 |
|
3 |
children from 6 to 18 years old |
1 860.00 |
1 944.00 |
2 027.00 |
|
4 |
able-bodied people |
1 762.00 |
1 841.00 |
1 921.00 |
|
5 |
people who have lost their ability to work |
1 373.00 |
1 435.00 |
1 497.00 |
The labor payment is indexed within the living wage established for able-bodied people sec.2 of para.4 of the Procedure for Indexation of Cash Income, approved by the Resolution of the Cabinet of Ministers of Ukraine of 17.07.2003, No. 1078, hereinafter − Procedure No. 1078).
When determining the amount of indexation it should be taken into account the rules of sub-para. 3 and 4 of para. 5 of Procedure No. 1078: if the amount of wage increase is higher than the amount of possible indexation in the month of increase, then the payment of indexation is stopped, if less – it is determined the indexation as the difference between the amount of possible indexation and the amount increase.
Tax social benefit
The tax social benefit is applied to the income accrued in favour of the taxpayer during the reporting tax month as a wage (other benefits equivalent to it in accordance with the legislation of payment, compensation and remuneration) if its size does not exceed the amount equal to the amount of the monthly living wage in force for an able-bodied person on January 1 of the reporting tax year multiplied by 1.4 and rounded to the nearest 10 hryvnias. The tax social benefit rate in 2018 is shown in Table 2.
Table 2. The tax social benefit rate in 2018
|
No. |
Type of tax social benefit |
TCU rate |
The tax social benefit rate in , UAH |
The maximum amount of income, which gives the right to receive a tax social benefit, UAH |
|
1 |
General |
para. 169.1.1 |
881.00 |
2 470.00 |
|
2 |
General “for children” |
para. 169.1.2 |
881.00 × number of children under 18 years old |
For one parent: 2 470.00 × number of children . For another one — 2 470.00 |
|
3 |
Increased “for children” |
para. “а” and “б” of para. 169.1.3 |
1 321.50 × number of children under 18 years old |
For one parent: 2 470.00 × number of children. For another one — 2 470.00 |
|
4 |
Increased |
para. “в”—“е” of para. 169.1.3 |
1 321.50 |
2 470.00 |
|
5 |
Maximum |
para. 169.1.4 |
1 762.00 |
2 470.00 |
USC
In 2018, the maximum amount of wage from which the unified social contribution to be paid will also increase, and will amount to 55 845.00 UAH for the period from January 1 to December 31.
Daily allowance
Daily allowance for business trips in Ukraine is set at a rate not exceeding 0.1 times the amount of the minimum wage determined as of January 1of the tax year, for each day of a business trip in 2018 − no more than 372.30 UAH per day (sub-para “а” of para. 170.9.1 of TCU).
From 2017, daily allowance for travel abroad is set at a rate no higher than EUR 80 for each calendar day of such a business trip at the official exchange rate of hryvnia to euro, established by the National Bank, calculated for each such day.
