Money After Dismissal is 'Eaten Up' by Taxes: Military Personnel Ask the Cabinet of Ministers to Cancel the Controversial Approach of the State Tax Service

Dismissed military personnel who receive their due payments after the end of service may lose part of their funds due to taxation. A petition has been registered on the Cabinet of Ministers' website calling for a review of the current approach to ensure the preservation of tax and social guarantees for these individuals.

The Problem

The petition highlights that it is common for dismissed military personnel to receive their payments late, often after being removed from military units' personnel lists.

The document stresses that such delays have become systemic since the full-scale invasion began, owing to an increase in military personnel numbers and the untimely financing of certain payments.

This situation leads to final settlements occurring after dismissal, and according to the petitioners, data on actual debts to these individuals are not accurately reflected in state databases.

The Petitioners' Stance

Petition No. 41/010417-26ep states that even after court decisions mandate payments to dismissed military personnel, the actual amount received may be reduced.

The petitioners attribute this to tax clarifications from the State Tax Service, which they believe contradict current legislation. Specifically, they cite the non-accrual of compensation for personal income tax and the application of a military tax at a rate of 5% instead of 1.5%.

Consequently, the appeal asserts, military personnel are repeatedly forced to seek legal recourse to protect their rights.

Referenced Document

The petitioners draw attention to the State Tax Service’s letter dated 13 May 2026, No. 6461/5/99-00-24-01-01-05.

They argue that the position outlined in this letter does not comply with the Procedure for the payment of monetary compensation for personal income tax amounts, approved by Cabinet of Ministers' Resolution No. 44, nor with the norms of the Tax Code of Ukraine.

The petition also references the Supreme Court ruling dated 27 July 2023, in case No. 380/813/22. According to the petitioners, this ruling concluded that dismissal from service does not deprive an individual of the right to personal income tax compensation for payments accrued during military service.

Demands from the Government

The petition asks the Cabinet of Ministers of Ukraine to:

• Review and revoke the State Tax Service’s position set out in the letter dated 13 May 2026, No. 6461/5/99-00-24-01-01-05.

• Instruct the Ministry of Finance and the State Tax Service to prepare a general tax consultation providing for the application of the military tax at a rate of 1.5% to payments accrued for the period of service, as well as the payment of full compensation for personal income tax.

• Ensure that such consultation is communicated to all state bodies within the security and defence sector.

• If necessary, develop and submit a government bill to the Verkhovna Rada to amend the Tax Code of Ukraine, thereby eliminating ambiguous interpretations of relevant norms.

Expected Impact of the

Petition

The petitioners believe that implementing these proposed changes will safeguard social guarantees for dismissed military personnel, prevent differing interpretations of tax legislation, and ensure the consistent application of personal income tax compensation and the 1.5% military tax rate to payments accrued during military service.

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