Individual entrepreneurs on the front, debts in the rear: the state is looking for a way out
28 May 12:41
Individual entrepreneurs (IEs) who are liable for military service have been facing a problem for years: even while on military service, they are automatically charged taxes, although this should not be the case. As of today, more than 3,000 mobilized individual entrepreneurs have tax arrears of almost UAH 30 million. And only now the State Tax Service has begun to develop an algorithm for resolving this situation. Komersant found out what exactly the fiscal service proposes.
Thehead of the State Tax Service, Ruslan Kravchenko, said that in April of this year, 1186 mobilized individual entrepreneurs filed statements about the inability to fulfill their tax obligations. Based on these applications, the single tax and military fee charges were reduced.
So where did the UAH 30 million debt come from? It’s simple: sole proprietors of the 1st and 2nd groups are required to pay the single tax and military fee in advance every month. To avoid automatic charges, it is necessary to file a statement of inability to fulfill tax obligations. But during mobilization and service, entrepreneurs usually do not think about such formalities.
As a result, debts arise. If the sole proprietor later wants to write it off, he or she must submit an application to his or her tax office within 10 days after mobilization or demobilization. In practice, it is very difficult to meet this deadline.
Therefore, to be on the safe side, a demobilized sole proprietor is advised to send a copy of his military ID with a cover letter indicating the date of call-up to the tax office. Those mobilized can only hope for a quick response from the territorial recruitment center (TCC) and stable operation of the post office.
The status of an individual entrepreneur remains
It is important to remember that a call-up for military service does not cancel the entrepreneurial status of a sole proprietorship, i.e. there are no grounds for termination of activities. This is stated in Part 3 of Article 39 of the Law of Ukraine “On Military Duty and Military Service”. After being called up, a sole proprietor is not obliged to close down – he or she may authorize another person to conduct business on the basis of a notarized power of attorney. In practice, wives, children, or other relatives often take care of the entrepreneur’s business.
“The Law on Unified Social Contribution states that sole proprietors called up for military service during the mobilization period are exempt from fulfilling their duties for the entire period of service, unless they are employers. They are also exempt from paying the military fee. However, they must notify the tax authorities by sending a copy of their military ID or other document indicating their call-up information. At the same time, individual entrepreneurs (except for e-residents) hired for contract service are not exempt from paying the unified social contribution for themselves,” explains lawyer Svitlana Khoma.
Thus, during the period of service, a sole proprietor is exempt from paying the unified social contribution for himself, and if he has employees, he is not obliged to pay the unified social contribution for them and submit reports – all this can be done after demobilization. In this case, no penalties or fines are charged. However, there are nuances in each case. For example, if a sole proprietor was called up in March and had been operating before that, he or she must pay taxes for January and February (before the start of service).
It should be reminded that for the period of military service, mobilized sole proprietors, as well as persons engaged in independent professional activities, are exempt from the obligation
- accrue, pay and submit tax reports on personal income tax;
- calculate, pay and submit tax reports on the single tax;
- to calculate, pay and submit reports on the military fee both as part of personal income tax and single tax reporting.
You can serve and do business
Military service is not a reason to say goodbye to business. An entrepreneur can continue to operate if he or she wishes and has time. Only those who fall under the definition of a “military official” are prohibited from doing business. But even here there are exceptions, Vasil Kisil & Partners’ lawyers note .
A military official may continue to carry on business activities under martial law only if all of the following conditions are met simultaneously
- you have been called up for military service under mobilization or have signed a contract;
- you were already registered as a sole proprietor before being called up or signing a contract;
- you became a military official as a result of this call-up or contract;
- at the time of the call-up or contract, you did not hold a position related to the performance of state or local government functions (i.e., you were not a civil servant, deputy, police officer, etc.)
However, if you are already in military service, you cannot open a sole proprietorship after that.
Author: Alla Dunina
