Publication date: 26.06.2024
Changes to the taxation system for individual entrepreneurs in Ukraine
An individual entrepreneur (IE) in Ukraine can change the taxation system depending on the circumstances and needs of the business. There are two main taxation systems for sole proprietorships: The general system and the simplified system. Below are the steps and necessary documents to change the taxation system.
Types of taxation systems
General taxation system:
- It provides for the payment of personal income tax (PIT) and military duty on net income, as well as a single social contribution (SSC).
Simplified taxation system (single tax):
- It includes several groups of single taxpayers, each with its own conditions and tax rates.
Steps to change the taxation system
Step 1: Choosing a new taxation system
Carefully review the terms and requirements of each taxation system and choose the one that best suits your needs.
Step 2: Prepare the documents
Required documents:
- Application for application of the simplified taxation system (to switch from the general to the simplified taxation system).
- Application for refusal from the simplified taxation system (for switching from the simplified to the general taxation system).
- Income tax return (if required for the general system).
Step 3: Submitting an application to the tax service
To switch to the simplified taxation system:
- Submit an application for the simplified taxation system to the State Tax Service (STS) no later than 15 calendar days before the start of the new quarter.
- Prepare and add information about the selected type of activity and group of single tax payers.
To switch to the general taxation system:
- Submit an application for refusal from the simplified taxation system to the State Tax Service by the 20th day of the month preceding the beginning of the new quarter.
- Prepare income tax returns and other required reports.
Step 4: Receive confirmation
After submitting an application to the State Tax Service, you will receive a confirmation of the change of taxation system.
Step 5: Adapting accounting and reporting
After a change in the taxation system, changes in accounting policies and reporting are required:
For the simplified taxation system:
- Keep records of income in accordance with the requirements of the selected group of single tax payers.
- Submit reports in accordance with the new requirements (quarterly or annually).
For the general taxation system:
- Maintain full records of income and expenses.
- File an annual income tax return and pay taxes based on the net income received.
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Conclusion.
Changing the taxation system of a sole proprietorship in Ukraine involves several important steps: choosing a new taxation system, preparing and submitting the necessary documents to the tax service, obtaining confirmation and adapting the accounting system. It is important to comply with the established deadlines and requirements to avoid mistakes and possible penalties. Consultation with a lawyer or accountant can help you complete all the steps correctly and ensure compliance with legal requirements.
The procedure for switching from the general system to the simplified system and vice versa for individual entrepreneurs
Switching between the general and simplified taxation systems is an important step for a sole proprietorship, which requires compliance with a certain procedure and timely submission of documents. Below is a step-by-step guide to switching from the general to the simplified taxation system and vice versa.
Switching from the general system to the simplified system
Step 1: Selecting a simplified taxation system group
Read the requirements and conditions of the single tax payer groups (groups 1-3) and choose the one that best suits your business and income.
Step 2: Prepare the application
Required documents:
- Application for application of the simplified taxation system (form No. 1-PRO).
Step 3: Submitting an application to the tax service
- Submit an application to the State Tax Service (STS) no later than 15 calendar days before the beginning of the new calendar quarter (i.e., by March 15, June 15, September 15, or December 15).
Step 4: Receive confirmation
After submitting the application, you will receive a confirmation from the State Tax Service of your inclusion in the register of single tax payers.
Step 5: Adapting accounting and reporting
- Keep records of income in accordance with the requirements of the selected group.
- Submit reports and pay the single tax in accordance with the new requirements (quarterly or annually).
Transition from a simplified system to a general system
Step 1: Prepare an application
Required documents:
- Application for refusal from the simplified taxation system (free form).
Step 2: Submitting an application to the tax service
- Submit an application to the State Tax Service by the 20th day of the month preceding the beginning of the new calendar quarter (i.e., by March 20, June 20, September 20, or December 20).
Step 3: Receiving confirmation
After submitting the application, you will receive a confirmation from the State Tax Service of your exclusion from the register of single tax payers.
Step 4: Adapting accounting and reporting
- Keep records of income and expenses in accordance with the requirements of the general system.
- File an income tax return and pay taxes according to your net income.
Conclusion.
The transition between the general and simplified taxation systems for individual entrepreneurs in Ukraine involves several steps that require timely submission of applications and appropriate adaptation of the accounting system. It is important to comply with the established deadlines and requirements to avoid fines and problems with the tax authorities. It is recommended that you contact an accountant or lawyer for advice and to ensure that all procedures are followed correctly.
