To the attention o legal entities - payers of the simplified system with tax peculiarities!

Press service of the State Tax Service of Ukraine, published 12 June 2023 at 17:01 Chapter: News

Legal basis for application of the simplified system of taxation, accounting and reporting, as well as payment of the single tax, is established by Chapter 1 of Section XIV of the Tax Code of Ukraine (hereinafter - Code).

Herewith, according to Paragraph 9 Sub-section 8 Section XX "Transitional Provisions" of the Code, 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 Code are applied taking into account certain peculiarities.

Sub-paragraph 9.8 Paragraph 9 Sub-section 8 Section XX "Transitional Provisions" of the Code stipulates that in order to choose or switch to the simplified system with tax peculiarities, the business entity submits application to the controlling body.

Business entity is considered the single tax payer of Group III with special taxation peculiarities from the next working day after submission of application - in case of submission of application starting from April 1, 2022.

Application form for application of the simplified taxation system was approved by Order of the Ministry of Finance of Ukraine No. 308 as of 16.07.2019, registered in the Ministry of Justice of Ukraine on 24.09.2019 under No. 1054/34025. 

Business entities (newly established) registered according to procedure established by the law, which within 10 days from the date of state registration submitted application for election of the simplified taxation system taking into account taxation peculiarities established by this Paragraph, are considered the single tax payers of Group III from date of their state registration (Sub-paragraph 9.8 Paragraph 9 Sub-section 8 Section XX "Transitional Provisions" of the Code).

After termination or abolition of the martial law, state of emergency on the territory of Ukraine, the single tax payers of Group III, who on the day of termination or abolition of the martial law, state of emergency on the territory of Ukraine used special taxation peculiarities, from the first day of a month following the month of termination or abolition of the martial law, state of emergency on the territory of Ukraine, lose right to use special taxation peculiarities and are automatically considered to be applying taxation system on which such taxpayers were before choosing special taxation peculiarities provided for in Paragraph 9 Sub-section 8 Section XX "Transitional Provisions" of the Code. 

Taxpayer has a right to independently (by submitting application) refuse to use taxation peculiarities, from the first day of a month following the month in which such decision was made. In this case, the taxpayer is considered to be applying taxation system he/she was on before choosing tax peculiarities, unless in the application for refusal to use taxation peculiarities, the taxpayer indicated transition to paying other taxes and levies.

Newly established business entities that wish to choose simplified taxation system taking into account taxation specifics established by this Paragraph, submit application according to the general procedure provided for by the Code (Sub-paragraph 9.9 Paragraph 9 Sub-section 8 Section XX "Transitional provisions" of the Code).

Clause 2 of Sub-paragraph 298.6 Paragraph 298 of the Code stipulates that in case of a change in the single tax rate, the application is submitted by the single tax payer of Group III not later than 15 calendar days before the beginning of a calendar quarter in which such rate will be applied.

Taking into account the above specified, business entities (newly established) that, from the date of state registration, have chosen the simplified system with special taxation peculiarities (single tax of Group III at 2 percent rate) may switch from 01.07.2023 to the application of the single tax 5 percent rate, provided that application for a change in the single tax rate is submitted not later than 15 calendar days before the beginning of a third quarter of 2023.

Sub-paragraph 298.1.4 Paragraph 298.1 Article 298 of the Code stipulates that business entity that is a payer of other taxes and levies according to norms of the Code may decide to switch to the simplified taxation system by submitting application to the controlling body not later than 15 calendar days before the beginning next calendar quarter. Such business entity can switch to the simplified taxation system once during a calendar year. 

Therefore, business entities that before choosing the simplified system with tax peculiarities were payers of income tax and intend to remain the single tax payers of Group III with 3 or 5 percent rate after abolition of tax peculiarities (provided they meet criteria defined in Chapter 1 Section XIV of the Code), have a right to submit two applications to the controlling body for application of the simplified taxation system.

They have to in the first application fill in paragraph 5.5 "Waiver from the simplified taxation system"; in the second application, which must be submitted 15 calendar days before the beginning of a third quarter of 2023, fill in paragraph 5.1 "Election or transition to the simplified taxation system" from 01.07.2023 and sub- paragraph 5.1.1, in which to indicate Group III and choose single tax rate depending on the VAT payer’s registration. 

Please note that according to Sub-paragraph 298.1.4 Paragraph 298.1 Article 298 of the Code, the business entity that is payer of other taxes and levies according to norms of the Code may decide to switch to the simplified taxation system by submitting application once during a calendar year. Therefore, income tax payers who chose the simplified system with tax peculiarities by submitting application in 2023 cannot take advantage of the opportunity to re-register as the single tax payers of Group III with 3 or 5 percent rate in 2023.