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Subsistence minimum in 2022 to change—what its impact is

Subsistence minimum in Ukraine in 2022. Photo: NBU

Subsistence minimum in Ukraine in 2022. Photo: NBU

Every year, the law on the state budget establishes the value of the subsistence minimum (SM) in Ukraine for different categories of persons. These values are conditional, and the authorities themselves admit that it is impossible to live on these amounts. However, some tax rates and a lot of values of social benefits depend on the SM official value. The Page reports about this in detail.

1

Statutory value of subsistence minimum in 2022

In the summer of 2021, the Ministry of Finance and the Cabinet of Ministers planned for three years ahead the SM value in the Budget Declaration for 2022—2024. But the SM official values are set out only for 2022 in the law on the state budget.

In Ukraine, five SM values are set out. Each of them has its own purpose.

Broad indicator: is used in government statistics.

Children: calculating social benefits to support low-income families, alimony, and assistance to single mothers

Persons who have become unemployable: calculating pensions (retirement pensions, pensions for those who have lost their breadwinner and others).

Employable persons: salary indexation, taxation (personal income tax, calculating social benefit tax relief, and single tax amount), qualification of administrative and criminal violations, and amount of court fees.

Statutory subsistence minimum in Ukraine in 2022

  • Able-bodied persons: 2,481 UAH (January—June); 2,600 UAH (July—November); 2,684 UAH (December)
  • Children under 6 years: 2,100 UAH (January—June); 2,201 UAH (July—November); 2,272 UAH (December)
  • Children aged 6 to 18 years: 2,618 UAH (January—June); 2,744 UAH (July—November); 2,833 UAH (December)
  • Persons who have become unemployable: 1,934 UAH (January—June); 2,027 UAH (July—November); 2,093 UAH (December)
  • Broad indicator: 1,393 UAH (January—June); 2,508 UAH (July—November); 2,589 UAH (December)

Note that a separate subsistence minimum was set out to establish the base salaries of judges, tax officials, and some prosecutors.

2

What is the difference between the actual subsistence minimum and the statutory one

How the government sets out the official SM values has not been publicly reported. It is likely guided by the statistics on the real cost of living but arbitrarily lowers these figures to reduce its social expenditures.

The value of the actual SM is established monthly by the Ministry of Social Policy guided by the real prices of goods and the cost of services the consumption of which, according to the officials, is enough for a person to live a month, restraining themselves as much as possible in spending, but not to starve and to have some clothes to put on.

According to these calculations, the actual SM was 4,419 UAH in November 2021 (including obligatory payments—5,062 UAH). By category:

  • for able-bodied persons—4,606 UAH (including the amount of obligatory payments—5,722 UAH);
  • Children under 6 years—4,065 UAH;
  • Children aged 6 to 18 years—5,035 UAH:
  • Persons who have become unemployable—3,727 UAH.

It can be seen that these figures are almost twice the value of the official SM planned for 2022.

In an interview to The Page, Minister of Social Policy Maryna Lazebna argued that the government was striving to ensure that pensions in Ukraine correspond to the actual subsistence minimum.

3

What will change in 2022 due to subsistence minimum growth

In Ukraine, a number of taxes and social payments are legally bound to the SM value. Therefore, when the values of such minimums change, the amount of payments and social benefits automatically grows. Here are the main ones.

Single tax, group 1: 10% of the subsistence minimum of an employable person.

Salary indexation: it is indexed within the SM for the employable persons.

Court fee: property claim of a legal entity—1.5% of the cost of the amount claimed, but not less than 1 SM for the employable persons and not more than 350 SMs (as of January 1); property claim of an individual or a sole proprietor—1% of the amount claimed, but not less than 0.4 SM and not more than 5 SMs, etc.

Amount of non-targeted charitable aid subject to declaration: amounts exceeding 140% of the SM for the employable persons.

Public services fee (for changing information about a legal entity in the National Register of Companies and Sole Proprietorships): 0.3 of the SM for employable persons as of January 1.

Pension tax upon the first registration of a car: depending on the cost of the car: 3% (but not more than 165 SMs); 4%—from 165 to 290 SMs; 5%—not less than 290 SMs (SM as of January 1).

The threshold for obtaining social benefit tax relief: calculated as the SM for an employable person as of January 1, multiplied by 1.4 and rounded to the next 10 UAH. Social benefit tax relief (basic) used in calculating personal income tax: 0.5 SM as of January 1. Social benefit tax relief (Increased): 150% of the basic tax relief, for example, for a single mother and for a child with a disability.

Allowances for children under custody: two subsistence minimums for a child of the corresponding age.

From January 1, 2022, the amount of the care supplements has been increased:

  • for persons with disabilities since childhood assigned to subgroup A of group I—from 150 to 200% of the SM for the persons who have become unemployable;
  • for a child with a disability of subgroup A—from 150% to 200% of the SM for children of the corresponding age.

The single mothers' allowance (maximum amount): the difference between 100% of the SM for a child of the corresponding age and the average monthly total family income per family member is paid.

Pension taxation threshold: 10 SMs for the employable persons (if the threshold is exceeded, the excess amount is taxed).

The amount of alimony guaranteed by the state: 50% of the SM for a child of the corresponding age. The minimum amount of alimony is 100% of the SM for a child.

Pension for the loss of a breadwinner: SM for the persons who have become unemployable: for one child of a deceased breadwinner—100%, for two—120%, for three or more—150%.

Allowances to low-income families: established in percentage correlation to the SM for the main social and demographic groups of the population.

Unemployment benefit (maximum amount): 4 times the amount of the SM for the employable persons.

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