Clarifications to the law "On income tax from individuals"

The Parliamentarians voted for amendments to the law "On income tax on individuals" in the second final reading. The clarifications relate to the calculation of standard tax deductions for those employees who were left without work at the initiative of the employer.

The Civil Code establishes that upon termination of an employment contract in connection with the liquidation of an organization or a reduction in the number or staff of the organization's employees, the dismissed employee is paid a severance pay in the amount of the average monthly earnings. In addition, the employee retains the average monthly earnings for the period of employment, but no more than two months from the date of dismissal. Business entities have an ambiguous understanding of the norms of the law when it comes to standard tax deductions for a dismissed employee the parliamentarians noted at the plenary session today.

The initiative of parliamentarians from the Committee on Economic Policy, Budget and Finance eliminates uncertainties in understanding the norms of tax law.

The Supreme Council supplemented Article 9 of the Law “On Income Tax on Individuals” with a norm that establishes that in the event of termination of an employment contract at the initiative of the employer and the accrual of due payments to the dismissed employee, standard tax deductions are provided to the taxpayer in respect of each month of the tax period for which calculation of these payments.

Deputies voted for the initiative in the second final reading. The amendments to the law will come into force from the beginning of the new financial year, January 1, 2024.