Tax Shield for Business: How to Write Off Property Destroyed by Shelling and Reduce Corporate Income Tax

In the context of ongoing hostilities, Ukrainian businesses face colossal risks of asset loss. The State Tax Service (STS) has published important clarifications regarding the tax consequences for companies whose property has been damaged or destroyed as a result of enemy shelling. According to the new information, entrepreneurs have the legal right to reduce the taxable base for corporate income tax by writing off the cost of lost assets.

Write-off Mechanism: Accounting vs. Taxation

The key point of the STS clarifications is that the Tax Code of Ukraine does not provide for specific tax differences specifically for the write-off of destroyed goods or inventory. This means that the write-off procedure takes place in strict accordance with accounting rules. When a company writes off the cost of destroyed goods as expenses, it directly affects the financial result before taxation. As a result, the amount subject to corporate income tax is automatically reduced.

For small businesses with an annual income not exceeding 40 million hryvnias, the procedure is maximally simplified. The cost of destroyed assets is written off as expenses according to accounting rules and is taken into account when determining the financial result. Thus, the company pays tax on reduced profit, which serves as a kind of financial compensation for the losses incurred.

Features for Large Taxpayers

For companies with an annual income of more than 40 million hryvnias, which work with tax differences, the algorithm of action has its nuances. In this case, the taxable base is reduced by the residual value of the destroyed asset, determined according to tax accounting rules. This requires a more careful distinction between the accounting and tax value of assets, however, the ultimate goal remains the same — reducing the tax burden due to force majeure circumstances.

Evidence Base: What is Needed for Write-off

It is important to understand that tax write-off of destroyed goods, inventory, and fixed assets is impossible without proper documentary confirmation. The enterprise must conduct an inventory and collect a package of documents recording the fact of destruction. The STS points to the necessity of having an act from the State Emergency Service (SES) regarding fire or destruction.

Also, a critically important document is an extract from the Unified Register of Pre-trial Investigations (ERDR), confirming the fact of shelling. Additionally, conclusions from the Chamber of Commerce and Industry and other documents certifying the fact and causes of property destruction may be required. Without this package of documents, the tax authority may refuse to recognize the expenses as justified.

International Register of Losses and the «Diia» App

In addition to tax write-offs, businesses and citizens have the opportunity to record destruction to receive state compensation. In 2026, the mechanism of interaction with the state has become more digital. The state offers to submit notifications about damaged property through the mobile application «Diia». Data entered through the application goes to the International Register of Losses, which is the first step towards possible reimbursement of funds in the future.