Can a legal entity entered in Register of non-profit institutions and organizations choose single tax payer’s Group III with taxation peculiarities during the martial law in Ukraine?

Law of Ukraine № 2120-IX as of 15.03.2022 "On amendments to the Tax Code of Ukraine and other legislative acts of Ukraine regarding validity of norms during the martial law" amended the Tax Code of Ukraine № 2755-VI as of 02.12.2010 with changes and amendments (hereinafter – TCU), in particular, it was amended with new Paragraph 9 Sub-section 8 Section XX "Transitional Provisions" of the TCU.

Paragraph 9 Sub-section 8 Section XX "Transitional Provisions" of the TCU stipulates that temporarily, from April 1, 2022 until termination or abolition of the martial law, state of emergency on the territory of Ukraine, provisions of Section XIV of the TCU are applicable taking into account specifics defined in Paragraph 9 Sub-section 8 Section XX "Transitional Provisions" of the TCU.

Single tax payers of Group III can be, in particular, legal entities – business entities of any organizational and legal form (Sub-paragraph 9.2 Paragraph 9 Sub-section 8 Section XX "Transitional provisions" of the TCU).

Clause 1 of Sub-paragraph 9.3 Paragraph 9 Sub-section 8 Section XX "Transitional provisions" of the TCU determines types of activities that do not allow legal entities to be the single tax payers of Group III, who use taxation peculiarities, established in Paragraph 9 Sub-section 8 Section XX "Transitional Provisions" of the TCU.

Registration of business entity as the single tax payer is carried out by making relevant entries in Register of single tax payers (Paragraph 299.1 Article 299 of the TCU).

Sub-paragraph 14.1.121 Paragraph 14.1 Article 14 of the TCU stipulates that non-profit enterprises, institutions and organizations are non-profit enterprises, institutions and organizations that are not the corporate income tax payers according to Paragraph 133.4 Article 133 of the TCU.

Non-profit enterprise, institution and organization for the corporate income taxation purposes is an enterprise, institution and organization that simultaneously meets requirements defined in Sub-paragraph 133.4.1 Paragraph 133.4 Article 133 of the TCU.

Income (profit) of the non-profit organization are used exclusively to finance expenses for maintenance of such non-profit organization, realization of purpose (goals, tasks) and directions of activity determined by its founding documents (First clause of Sub-paragraph 133.4.2 Paragraph 133.4 Article 133 of the TCU).

As follows, legal entity entered in Register of non-profit institutions and organizations (hereinafter referred to as the Register) may choose the single tax payer’s Group III, who use taxation peculiarities during the martial law in Ukraine, provided that it is excluded from Register and in case of compliance with requirements determined in Paragraph 9 Sub-section 8 Section XX "Transitional Provisions" of the TCU.

More information is in the “Knowledge Base” of public information and reference resource