By July 2008 the average nominal salary in Ukraine reached 1,930  hryvnias (UAH) per month, around 300 Euro. Despite remaining lower than in neighboring central European countries, the salary income growth in 2008 stood at 36.8 percent.

In Ukraine all official salaries are paid in national currency with possible reference to any foreign currency due to exchange rate of the National Bank of Ukraine. Most companies maintain their salary agreements in UAH or USD, however linked to the USD.  

The information about salary level of Ukrainian IT specialists is received from the web-sites which represent the statistics for the last years. Important to take into account that salary level in Kiev is higher than in Lviv.  The initial net salary for programmer in Lviv is around USD 300 per month (2007). However, experienced specialist will expect to get USD 600-1,000 per month. The salary level for an experienced local project manager is USD 900-2,200 per month.

Table below shows different net salary levels in Ukraine (2007), with a comparison between Lviv and Kiev.

Ukrainian Taxation Scheme

Compared to other Eastern-European countries, the Ukrainian taxation system is not the most beneficial. However, the low labor cost, high education level and culture off-set this taxation draw-back.

The UA-Company must report and pay taxes irrespective of its legal form (LLC, CJSC) or activity (production, selling, providing services). Only certain tax privileges are rendered to companies or certain industries (coal mining, automotive, innovation industries).

Main taxes are corporate profit tax, VAT and payroll charges.

Corporate profit tax is paid at the rate of 25% of net profit. Net profit is calculated whereby deduction of all costs and depreciation charges from gross revenue.

Value added tax (VAT) is paid by legal entities located in Ukraine, which sell their goods (services) in Ukraine or import goods into Ukraine.  VAT rate of 20% is added to the sales value of goods (services) or to customs value in the case of import of goods.

Payroll charges. According to legislation company-employer must pay obligatory pension and social contributions for its employees constituting in total 36.67%. If salary of an employee exceeds USD 1,880 (UAH 9,495), company must not pay pension charges (33.2%) for exceeding amount.

Employee contribution and Income tax

Employee’s social contributions and employee’s income tax are withheld by the UA-Company (employer) and transferred directly to the appropriate authorities (funds, tax inspection, etc.). In total employee’s social contributions are equal to 3.5% of the salary.

Employee’s income tax is equal to 15% of employee’s salary reduced by all payments to social funds.