A Reconstruction Tax Instead of the Military Levy?

Following the end of martial law in Ukraine, the current 5% military levy may be replaced with a reconstruction tax.

This is outlined in the updated Memorandum on Economic and Financial Policies (July 2026), prepared as part of Ukraine’s cooperation programme with the International Monetary Fund (IMF).

Paragraph 13 of the Memorandum states:

“Following the extension of the 5 percent military levy for three years after the lifting of martial law, we will ensure that revenues do not decline when this measure expires. One option under consideration is the introduction of a reconstruction tax to replace the military levy, which will be incorporated into the legislation governing the transition period following the end of martial law.”

The Memorandum does not provide for the automatic introduction of a new tax. Rather, it indicates that the Ukrainian authorities are considering a reconstruction tax as one of the possible mechanisms for maintaining tax revenues after the military levy expires.

Accordingly, the country’s reconstruction may also be financed through tax revenues derived from individuals’ income. The Memorandum does not mention any plans to reduce the size of the public administration or to cut the exceptionally high salaries and bonuses paid to Ukrainian government officials.

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