Unify Social Insurance contribution changes

Tax & Legal Alert

12 March 2015

Law of Ukraine “On amending Section VIII “Final and transitional provisions” of the Law of Ukraine “On collection and accounting of the unified contribution to compulsory state social insurance” as to payroll unburdening (hereinafter, the “Law”) was published on 12 March 2015 in Holos Ukrayiny. The Law becomes effective on the day that follows the date of its promulgation, i.e. 13 March 2015.

Below you may find a brief summary of key provisions of the Law.

  •  Introduction of new criteria for application of a degression factor to the rates of the Unified Social Insurance Contribution (hereinafter, the “USIC”) in 2015.  

The USIC payers may apply the degression factor if they meet the following criteria:

  • the USIC base per insured person in the reporting month has increased by 20% and more as compared to the average monthly USIC base for 2014 per insured person; 
  • after applying the factor, average payment per insured person in the reporting month will not be less than the average payment per insured person in 2014;
  • the number of insured persons in the reporting month does not exceed 200% of the average monthly number of insured persons in 2014. This condition does not apply to self-employed persons and individuals who employ other persons under labor contracts.
  • In 2015, the following formula will be used to calculate the factor:
    Factor= Average monthly USIC base per person in 2014/USIC base for the reporting month per person
  • In 2015, minimum value of the factor will be 0.4.
  • In 2016, a 0.6 factor will apply.
  • The factor will be applied at the time of calculating salary (income) of individuals and/or remuneration under civil contracts, temporary disability and maternity allowance.
  • USIC payers being in arrears will be disqualified from applying the degression factor until such arrears are fully settled. 
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