Businesses will change the rules for calculating interest on loans from 2028

The Cabinet of Ministers has approved a bill that changes the rules for taking into account interest on loans and other borrowings when calculating income tax. The new rules are planned to be introduced from January 1, 2028.

This was reported by the Ministry of Finance of Ukraine.

What limit is proposed to be established

According to the bill, companies will be able to take into account excessive borrowing costs when determining the object of taxation within 30% of EBITDA.

EBITDA is an indicator of a company’s profit before interest, taxes, and depreciation.

Interest expenses that exceed the established limit will not be able to reduce taxable profit in the relevant tax period.

At the same time, such amounts will not be lost. They will be allowed to be carried over in full and without time limits to subsequent tax periods.

Which loans will the rule apply to

The new rule will apply to all debt obligations, regardless of who provided the financing.

This applies to both Ukrainian and foreign creditors, as well as to persons related and unrelated to the borrower.

The new rule is expected to replace the current selective restriction. In this case, a separate mechanism of the so-called “thin capitalization” will not be applied.

When the restriction will not apply

The restrictions are not planned to be applied if the total amount of borrowing costs does not exceed 500 thousand euros.

For financing received from unrelated persons without collateral from related companies, the threshold may be up to 3 million euros.

Exceptions are also provided for:

banks;

insurance companies;

long-term public infrastructure projects.

What will happen to the old unaccounted interest

Interest that businesses did not have time to take into account under the current rules by the end of 2027 will be available for use after the transition to the new system.

Thus, the accumulated expenses will not be canceled after the change in the tax regime.

When will the new rules come into effect

The introduction of the new mechanism is scheduled for January 1, 2028.

However, before entering into force, the draft law still has to be considered and approved by the Verkhovna Rada.