What is basis for accrual of single contribution for individuals – entrepreneurs in the case of transition to general from the simplified taxation system

Paragraph 4 Part 1 Article 4 of the Law of Ukraine as of 08.07.2010 № 2464-VI “On collection and accounting of single contribution to obligatory state social insurance” with changes and amendments (hereinafter – Law № 2464) stipulates that payers of single contribution to obligatory state social insurance are individuals – entrepreneurs, including those who chose the simplified taxation system and who:

receive an old-age or service pension, or are disabled, or have reached age established by Article 26 of the Law of Ukraine “On obligatory state pension insurance” and receive pension or social assistance according to the Law;

have main place of work or concluded a gig contract with a resident of “Diia” City” for months for which employer (resident of “Diia” City) paid single contribution of at least the minimum insurance premium.

Single contribution for payers referred to in Article 4 of the Law № 2464 is set at 22 percent to the accrual base of single contribution determined by Article 7 of the Law № 2464 (Part 5 Article 8 of the Law № 2464).

Article 7 of the Law № 2464 stipulates that single contribution is charged for:

Individuals – entrepreneurs on the general taxation system – amount of income (profit) received from their activities, which is subject to personal income tax. In this case, amount of single contribution may not be less than amount of the minimum insurance premium for a month when income (profit) was received.

If such payer does not receive income (profit) in the reporting period or a separate month of reporting period, such payer has a right to determine the accrual base, but not more than the maximum value of accrual base established by Law № 2464. Herewith, amount of single contribution may not be less than amount of the minimum insurance premium (Paragraph 2 of Part 1 Article 7 of the Law № 2464);

Individuals – entrepreneurs on the simplified taxation system – amounts determined by such taxpayers independently for themselves but not more than the maximum value of single contribution’s accrual base established by this Law. Herewith, amount of single contribution may not be less than amount of the minimum insurance premium (Paragraph 3 of Part 1 Article 7 of the Law № 2464).

As follows, in the case of transition of individuals – entrepreneurs from the simplified to the general taxation system, the single contribution’s accrual base, during a period of activity on the general taxation system, is amount of income (profit) received from their activities subject to the personal income tax only in months when such income was received.

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