The Law of Ukraine as of 13.05.2020 № 592-IX “On amendments to the Law of Ukraine “On collection and accounting of single contribution to compulsory state social insurance” to eliminate discrimination among payers” introduced a number of amendments to the Law of Ukraine as of 08.07.2010 64 2464-VI “On collection and accounting of single contribution to compulsory state social insurance” (hereinafter – the Law № 2464) particularly regarding the exemption for single contribution payers from paying such contribution, which came into force on 01.01.2021.
From 01.01.2021, the list of single contribution payers exempted from paying single contribution and types of pension provision that give a right not to pay such contribution has been expanded. Relevant changes were made to Part 4 Article 4 of the Law № 2464.
Given the above mentioned information, from 01.01.2021 individuals – entrepreneurs and individuals involved in independent professional activity are exempted from paying single contribution if they receive an old-age pension or for years of service or are individuals with disabilities, or have reached age determined by Article 26 of the Law of Ukraine “On compulsory state pension insurance” and receive pension or social assistance according to the Law. Such individuals may be payers of single contribution only under condition of their voluntary participation in system of compulsory state social insurance.
In addition, Article 4 of the Law № 2464 was amended with Part 5 and 6, according to which there are exemptions from paying a single contribution for:
individuals who carry out independent professional activity, provided that they are registered as individuals – entrepreneurs and carrying out one type of activity at the same time as individual – entrepreneur and individual who carries out independent professional activity;
individuals involved in independent professional activity and individuals – entrepreneurs who have the main place of work, for the months of reporting period for which the employer has paid an insurance premium for such individuals in the amount of not less than minimum insurance premium. Such individuals may be payers of single contribution provided that they independently determine accrual base for the months of the reporting period for which the employer paid the insurance premium for such individuals in amount less than the minimum insurance premium but not more than the maximum accrual base established by this Law. Amount of single contribution may not be less than amount of the minimum insurance premium.
In addition, for individuals – entrepreneurs (excepting those who chose simplified taxation system), individuals involved in independent professional activity and farm members there is no obligation to pay the minimum amount of single social contribution for the months when no income (profit) was received. Relevant changes were made to Paragraph 2 Part 1 Article 7 of the Law № 2464.
Therefore, according to the specified amendments, for individuals who apply general taxation system, individuals involved in independent professional activity and farm members, the single contribution will be accrued on the amount of income (profit) received from their activity, subject to the personal income tax. In this case amount of single contribution may not be less than amount of the minimum insurance premium for the month when income (profit) was received.
If such payer did not received 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 amount of single contribution accrual base established by this Law. Amount of single contribution may not be less than amount of the minimum insurance premium.
As follows, independent determination of accrual basis from single contribution is exclusively a right and not an obligation for these payers from 01.01.2021.