The Ukraine government has declared that no Russian tanks or military equipment captured by citizens need to be declared as income for tax purposes. Most countries have a long historical relationship between war and taxing its citizens.
War & taxes in the US
Here in the US, individual federal income-taxes were originally only required when needed, as in times of war. However, from 1913 to 1918, the top federal income-tax rate rose from 7% to 77%; following WWI, it came down to 25%. The top WWII rate reached 94%. Unfortunately, even prior to the current war in Ukraine, several US politicians have suggested raising taxes to war like levels.
Ukraine government’s decision
In a brilliant move, Ukrainian authorities have added to an already hugely powerful wave of national patriotism, a smidgeon of financial opportunity via this tax break. Recently, several high-profile Ukrainian athletes have moved back to the Ukraine to take up arms to fight the Russian invasion. Risking it all for no other reason than love of country. By announcing that Russian military equipment can be captured tax free, the vigor already demonstrated by less wealthy brave men and women can only be bolstered by knowing their families may benefit by their valor for years to come.
The worth of this equipment will vary widely. But even a completely inoperable and unrepairable tank, for example, will still have significant value as the scrap metal alone. Couple that with what will sure to be a strong market for anything that can be used to defend one’s home (and country) should also find a ready market. This will likely be true both during and after the war. Which is important as war often decimates a country’s economy.
A possible silver lining for Ukraine
The first priority may be to repel the Russian invaders. But close behind is the survival of one’s family both during the war and after. Then, hopefully, victory and a long-term solution for peace. As the political situation stood prior to the invasion, Ukraine was not allowed into the EU or NATO. That will likely remain the case even after an all-out war with Russia. Nonetheless, very few actions could have bolstered their case of being independent from Russia more decisively. Regardless, there should be ample opportunities for improved relations with most other countries, provided of course the Ukrainian people are successful defending their country and sovereignty. Which unfortunately, is a big “IF”.
There is no righteous justification for this war, only political motivation and greed. It is hoped that the world can unify their opposition to this invasion with a swift and peaceful end. War, greed, and political selfishness or expansion are the primary obstacles to true and lasting peace. Until these are set aside by all the most powerful countries, most of the worst problems to have faced humanity since the dawn of time will, unfortunately, continue. Though relatively insignificant, the Ukrainian government’s decision to announce that captured military equipment will not be taxed as income indicates forethought and hopefully enough brilliance to successfully defend their country and achieve long-term peace.
We hope you found this article about Ukraine to Citizens: Pay No Taxes on Captured Russian Military Equipment helpful. If you have questions or need expert tax or family office advice that’s refreshingly objective (we never sell investments), please contact us or visit our Family office page or our website at www.GROCO.com. Unfortunately, we no longer give advice to other tax professionals gratis.
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