Mobilized Private Entrepreneurs in Ukraine will not have to pay taxes and SSC while serving in the military. Will the tax debts of mobilized entrepreneurs be annulled?

The author of the article: Denis Korablyov

Modified date: 08 November 2025

Mobilized and contracted private entrepreneurs have received important news: from now on, during their military service, they are exempt from paying taxes and the Unified Social Contribution, and any previously accrued debts will be canceled. Law No. 4505 introduces an automatic exemption mechanism without applications or certificates, finally resolving a long-standing problem for entrepreneurs at the front.

The war has changed the lives of thousands of entrepreneurs. Some took up arms, while others remained working in the rear. But the issue of taxes for those FOPs who are now mobilized or serving under contract has remained painful and confusing. Why should an FOP pay taxes if they are defending the state? Why can’t the state “freeze” these accruals automatically? It has been more than 3 years of a full-scale war, and only now has the government finally addressed this problem. In this article, we will review Law No. 4505, which has already sparked discussions among entrepreneurs. How exactly are the issues of tax debts for FOPs serving in the military resolved? And are they exempt from paying the single tax, military levy, and SSC if serving under contract? Let’s find out.

According to official data, more than 1 million entrepreneurs already owe the state 13 billion hryvnias in taxes. Since the beginning of the full-scale war, the number of debtors has doubled! A significant part of this amount consists of debts of mobilized entrepreneurs who physically did not manage or were unable to submit all the necessary applications.

It would seem like a simple question: if a person leaves their business and goes to defend the country, should they still have to think about tax reports? But in reality, things turned out to be much harsher. Entrepreneurs who joined the Armed Forces or signed a service contract found themselves trapped: the tax service continued to accrue tax obligations – even if the business was not actually operating. In addition, mobilized FOPs often ask: do they need to pay taxes and file reports if their activity is suspended, or, conversely, continues through a trusted person. It is also important to know that entrepreneurs must notify the tax office about mobilization after the adoption of Law No. 4505, when and which documents to submit. Why have tax debts of mobilized FOPs become a problem?

How did the tax system for mobilized FOPs work before?

Previously, mobilized FOPs had the right not to pay the single tax, military levy, and SSC “for themselves.” But to do this, they had to complete a bureaucratic quest:

• submit an application to the tax office at the place of FOP registration about the inability to fulfill tax obligations;
• provide a copy of the military ID or another document confirming conscription or mobilization.

On paper, it looked simple, but in practice, the system worked with delays and constant demands from entrepreneurs. The tax service learned about the mobilization of FOPs only after receiving the application. And if the entrepreneur did not submit documents within 10 days after demobilization, it was considered that the benefit did not apply, and all taxes for the period of service were automatically accrued as debt.

Case: Oleksii, an FOP from Kyiv, was mobilized in 2022. After returning home, he discovered that during his year of service, more than 40,000 UAH of SSC and single tax debt had “piled up” – simply because he had not submitted the application on time. His story is not an exception, but a typical scenario for many mobilized entrepreneurs.

Imagine: a person returns from the front, and a “letter of happiness” with tax debt for the entire period of service is already waiting for them. Is this fair? Doesn’t such a system turn a defender into a “debtor” in the eyes of the state?

In addition, according to Law No. 2464-VI, the military recruitment office was supposed to notify the tax authorities about the mobilization of an FOP, but in practice this almost never happened. Some entrepreneurs informed the tax service on their own, but even this did not always protect them from being charged SSC debt for the entire period of service.

It was even worse for FOPs under contract: they had no tax benefits at all. That means those who signed a contract were forced to pay taxes even while serving.

If you or your acquaintances have faced such a situation – do not delay, seek advice from an accountant or lawyer. Each case is individual, and our team of experts will find a solution even in difficult circumstances.

Law No. 4505: Have FOPs finally received real support?

In fact, there is relief. Mobilized individual entrepreneurs (FOPs), regardless of the taxation system – both under the single tax and the general system – are exempt from paying the single tax (ST), personal income tax, and military levy for the entire period of mobilization. This right applies regardless of whether the FOP has employees. The corresponding provision is fixed in para. 25, subpara. 10, Section XX “Transitional Provisions” of the Tax Code of Ukraine (TCU).

The new Law of Ukraine dated 18.06.2025 No. 4505-IX introduces a practical mechanism for implementing this benefit. Thanks to automatic data exchange between state agencies, the tax service will be able to promptly apply the exemption from taxes, cancel penalties, and SSC during the mobilization of an entrepreneur.

What new does the law promise?

First – automatic data exchange: bureaucracy VS digitalization. The most important innovation is the automatic data exchange between the tax service (STS) and the Unified State Register of Conscripts, Military Obligated Persons, and Reservists. Previously, everything depended on the initiative of the entrepreneur (“if you don’t submit – you won’t get anything”), but now the state must act first.

Previously, the legislation (in particular Law No. 2464-VI) stated that to be exempt from paying taxes after demobilization, it was necessary to submit an application and a copy of the military ID. But there was no practical mechanism guaranteeing that the tax service would not accrue debt. Often, even those who informed the tax office themselves still received charges for SSC, penalties, and fines.

Now everything will change. Thanks to Law No. 4505, the tax service is obliged to cancel all accruals and fines for FOPs for the period of service, starting from February 2022. Since it will receive official confirmation of mobilization directly from the register. This means that the responsibility for the correct application of benefits lies not on the FOP, but on the state.

The law finally creates a real and convenient mechanism for exempting mobilized entrepreneurs from the tax burden – automatically, without applications, without stress, and without queues.

Which taxes are canceled and for what period?

Based on automatically received data from the tax service:

• NO accrual of advance payments for the single tax, military levy, and SSC for the entire period of service (mobilization or contract);
• all already accrued debt amounts for this period are annulled;
• this also applies to SSC “for oneself” (which was the biggest “pain” for FOPs).

For example, if an entrepreneur signed a contract in March 2024 and is still serving, taxes for this period will be automatically annulled. And if they were already excluded from the single tax – the status of “simplified taxpayer” will be restored without unnecessary checks.

And what if you were already excluded from single tax payers due to debt?

For such entrepreneurs, restoration of registration as a single tax payer is provided. This is important, because earlier even a technical debt could lead to the loss of the “simplified” status, and it was difficult to restore it.

Mobilized FOP working: what about the declaration, should it be submitted?

Mobilized FOPs, regardless of the taxation system – single tax or general system – are exempt from submitting declarations during the period of service. Even if they received income during mobilization, reporting is not required.

This is directly allowed by the Tax Code – during the period of service there are no tax obligations at all, even if the business continued to operate and receive money.

The basis for such exemption is official information about mobilization from the Unified Register of Conscripts and Military Obligated Persons. Another important point – after demobilization, there is no need to “add on” or pay retroactively. The state will not require the payment of single tax, PIT, or military levy on income received during the service period.

What needs to be done after demobilization?

After returning from service, an FOP will have 180 calendar days to fulfill all tax obligations that do not relate to the service period or employees. If there are employees – reports can be submitted within 150 days without fines or penalties.

And what if the information is not in the register?

There are different situations: data was not transferred, an error occurred, or a system failure happened. In such a case, the FOP can still submit an application and documents independently – and there are no deadlines here. That is, even if the “automatic system” did not work, rights are protected!

Most important: now the benefit also applies to contract servicemen.

This change is a real breakthrough. If earlier contract servicemen were “left out” of the benefits, now the exemption from the single tax, military levy, and SSC also extends to them. This is fair and logical: regardless of the form of service, all defenders have equal rights.

Conclusion

What is important to know now:

• Tax debts accrued during the service period will be automatically annulled. No need to submit additional applications or certificates – the state will obtain information from the military register itself.
• Exemption from taxes and contributions now extends to contract servicemen, not only mobilized ones.
• If you were excluded from the single tax due to debts, the “simplified taxpayer” status will be restored without additional checks and delays.
• After demobilization, there are 180 days to fulfill tax obligations, and 150 days for reporting on employees.
• If the system did not “see” you automatically, you can still submit documents independently – the benefit will apply regardless of the submission date.

Cheat sheet for FOPs in service

• Check your taxpayer’s personal account every month.
• If the debt was not written off – don’t panic, contact the tax office or submit an application through the electronic cabinet.
• After demobilization, don’t postpone tax matters – you have 180 days, but it’s better to resolve everything right away.
• Keep all documents regarding your service (orders, IDs) – they may be needed to confirm your status.
• Don’t be afraid to contact an accountant or lawyer if the issue is complex or unusual.

The new rules are not just a change in the law, but a step toward justice for those who defend the country. Keep track of your tax matters, don’t be afraid to ask for help, and remember: your rights must be protected not only on paper but also in practice.

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