Tax will be increased 4 times for individual entrepreneurs: what changes are expected to happen to entrepreneurs
3 June 2024 12:00
Taxes for individual entrepreneurs are expected to rise in Ukraine. The government has already described new rules in the National Revenue Strategy, but they will be implemented gradually, "Komersant Ukrainian" reports
This document was developed by the Ministry of Finance and approved by the Cabinet of Ministers of Ukraine. It outlines reforms in the areas of taxes and customs that will last until 2030.
Soon, there will be no need to register an individual entrepreneur. The status of an individual entrepreneur will be acquired automatically on an application basis by opening an account with the status of “for conducting business” in a banking institution.
Upon closure of such an account, its holder will automatically lose the status of an entrepreneur and the right to tax a certain part of their business income under the rules and rates provided for entrepreneurial activities.
All income of individuals received outside of business activities, except for those directly provided for by the Tax Code of Ukraine, will be subject to taxation at
the general rate of personal income tax provided for by the Tax Code of Ukraine
Of Ukraine.
Taxes for individual entrepreneurs and legal entities are also expected to increase over three years.
It is noted that the simplified taxation system is used by about 1.7 million taxpayers who generate relatively stable tax revenues – about 0.9% of GDP in 2020-2022.
Currently, the single tax rate (percentage of income) for the third group is 5%. Gradually, it will be raised to 18%, and in three years, such legal entities will be banned from using this type of taxation.
Thesecond and third groups of individual entrepreneurs will be merged into one, and all taxpayers under this unified system will pay tax on their income based on a differentiated scale of rates. The single tax rate for them will be set at between 3 and 17%.
The National Revenue Strategy states that the amount of the tax will depend on the activity. Individual entrepreneurs working in the service sector will be subject to higher taxes than those working in trade.
It is worth noting that the first group of sole proprietors will have to reduce the number of activities . The approach to taxation will also be revised: the fixed tax rate will be cancelled and only the tax on actual income will be applied, and the maximum single tax rates provided for a certain type of activity after the end of the transition period will be introduced for taxpayers who do not use cash registers or
PRROS.
For the united second group of individual entrepreneurs, the use of payment transaction recorders (classic cash registers or software cash registers) will be mandatory.
For peasant farms (individuals), which will remain in the fourth group of the STS, the tax base will be expanded. For agricultural producers (legal entities), the single tax rates will be revised upwards to 18% within three years. After the end of the transition period, legal entities will be prohibited from using the simplified taxation system.
Exceptions to the possibility of conducting business without the obligation to keep records and document the origin of goods sold will be cancelled. Such accounting will be as simplified as possible, but will be mandatory regardless of the taxpayer’s legal form and/or type of business.
Changes to the single tax and the rules for individual entrepreneurs are expected to be introduced only in 2025. The rules will be implemented within two years.
