About Individual Income Tax

About Individual Income Tax

About individual income tax (hereafter IIT)

The amount of taxable income of an employee is determined in the following order:

the amount of the employee’s income referring to taxation at the payment source accrued for the tax period,

minus

the amount of income adjustment for the tax period provided in Paragraph 1, Article 341 of the Tax Code,

minus

the amount of tax deductions in the manner specified in Article 342 of the Tax Code (Paragraph 1,  Article 353, Tax Code as amended by Article 33 of the Law on Introduction).

Thus, when determining the amount of the employee’s income taxable by the IIT, adjustments and tax deductions are applied in the manner specified in Paragraph 1, Article 353 of the Tax Code.

At the same time, the amount of the employee’s taxable income, as defined in Paragraph 1 of this article, is reduced by 90% if the employee’s accrued income for the tax period does not exceed 25 times the monthly calculation index established by the law on the national budget and valid as of January 1 of the corresponding financial year (Paragraph 1-1, Article 353 of the Tax Code (enacted on January 1, 2021)).

In turn, the employee’s income is taxed with the IIT at the source of payment at a rate of 10% (Paragraph 1, Article 320 of the Tax Code).

At the same time, the calculation, withholding and payment to the IIT budget are carried out at the source of payment by the tax agent for the income specified in subparagraphs 1) - 12) and 17) of Article 321 of the Tax Code, if such income is subject to payment (paid) by the specified tax agent (Paragraph 1, Article 350 of the Tax Code).