Paragraph 291.5 Article 291 of the Tax Code of Ukraine (hereinafter referred to as the TCU) determines the list of activities that are not entitled to the application of a simplified taxation system, accounting and reporting.
The Law of Ukraine as of 20.09.2019 № 129-IX “On amendments to the TCU on the un-shadowing of calculations in sphere of trade and services” (hereinafter – the Law № 129) outlined Sub-paragraph 8 Sub-paragraph 291.5.1 Paragraph 291.5 Article 291 of the TCU in the new version which came into force on 20.10.2019.
Business entities (legal entities and individuals-entrepreneurs) involved in the following activities: mail service (except for courier activities), fixed telecommunications service with the right to maintain and operate telecommunications networks and providing telecommunication channels (local, long distance, international), provision of fixed telephony services using wireless access to the telecommunication network with the right of maintenance and provision of telecommunication channels (local, long distance, international), provision of mobile telecommunication services with the right to maintain and operate telecommunications networks and to provide telecommunication channels, provision of services for the maintenance and operation of telecommunications networks, broadcast television and radio broadcasting networks, wired broadcasting and television networks cannot belong to the single tax payers of Group I – III according to Sub-paragraph 8 Sub-paragraph 291.5.1 Paragraph 291.5 Article 291 of the TCU.
Part 5 Paragraph 298.3 Article 298 of the TCU determines that application for the simplified taxation system must specify the types of business activity chosen by the business entity in accordance with the Classifier of business activities DK 009: 2010, approved by the Order of the State Consumer Standard № 457 as of 11.10.2010.
Order of the State Consumer Standard № 396 as of 23.12.2011 defines types of business activities included to the Classifier of business activities DK 009:2010 61.90 “Other telecommunications activities” Section 61 “Telecommunications (telecommunication)”, particularly provision of access to the Internet through networks established between clients and internet providers that do not own or control ISPs, such as dial-up Internet access, etc.
According to the concepts specified in Article 1 of the Law of Ukraine as of 18.11.2003 № 1280-IV “On telecommunications” there are separated concepts of telecommunications operator and telecommunications provider.
Provider is a business entity entitled to conduct telecommunications activities without the right to maintain and operate telecommunications networks and to provide telecommunication channels.
Subsequently, the individual-entrepreneur in the case of providing Internet access provider services has the right to operate on the simplified taxation system by the condition that such service provider does not provide services determined by Sub-paragraph 8 Sub-paragraph 291.5.1 Paragraph 291.5 Article 291 of the TCU.