Simplified taxation system of accounting and reporting is a special mechanism for paying taxes and levies, which establishes replacement for payment of individual taxes and levies established by Paragraph 297.1 Article 297 of the Tax Code of Ukraine (hereinafter – Code) for the single tax payment in manner and under conditions specified by Chapter 1 Section XIV of the Code with simultaneous maintenance of simplified accounting and reporting.
Business entity independently chooses simplified taxation system if such payer meets requirements established by Chapter 1 Section XIV of the Code and is registered as the single tax payer in manner specified by Chapter 1 Section XIV of the Code.
At the same time, taxpayers who (and/or founders (participants), whose ultimate beneficial owners) do not have a right to choose and be on the simplified taxation system, and also do not have a right to confirm the single tax payer’s status of Group IV, according to procedure established by the Law of Ukraine "On sanctions" adopted decisions on the application of special economic and other restrictive measures (sanctions) during the application period of such sanctions.
It should be noted that taxpayers, carrying out their activities within framework of the simplified taxation system, independently determine types of activities that will be used. Herewith, Paragraph 291.5 Article 291 of the Code defines list of activity types, implementation of which does not give a right to use the simplified taxation system of accounting and reporting, and use of which may lead to the loss of possibility of staying on the simplified taxation system.
Paragraph 291.5 Article 291 of the Code defines list of activity types, implementation of which does not entitle business entity to use the simplified taxation system of accounting and reporting.
Specifically, business entities involved in provision of postal services (except for courier activities), activities for provision of fixed telephone communication services with a right to maintain and operate telecommunication networks and provision of telecommunications channels (local, long-distance, international), activities for provision of fixed telephone communication services using wireless access to the telecommunications network with a right of technical maintenance and provision of telecommunication channels (local, long-distance, international), activities for provision of mobile (mobile) telephone communication services with a right to maintain and operate telecommunication networks and provision of telecommunication channels for use, activities for provision of services in maintenance and operation of telecommunication networks, broadcast television and radio broadcasting networks, wire radio broadcasting and television network.
That is, business entities are taxpayers who chose activity types according to Classification of economic activity types (KVED-2010):
61.10 - "Activities in the wired telecommunications",
61.20 - "Activities in the wireless telecommunications",
61.30 - "Activities in the satellite telecommunications",
61.90 - "Other activities in the telecommunications"
and provide electronic communication services do not have a right to use the simplified taxation system.
In case of carrying out activity types that do not give a right to use the simplified taxation system, single tax payers are obliged to pay other taxes and levies specified by the Code from the first day of month following tax (reporting) period in which such activity types were carried out.
Cases and terms during which single tax payers are obliged to switch to paying other taxes and levies specified by the Code are established by Sub-paragraph298.2.3 Paragraph 298.2 Article 298 of the Code.
Business entities that violate usage conditions of the simplified taxation system, attention!
To date, facts of payments by citizens for provision of the Internet access services, whose providers are individuals-entrepreneurs and legal entities that are on the simplified taxation system, continue to be revealed!
At the same time, such taxpayers, who were involved in economic activity of class 61.90 "Other activity in the telecommunications", changed activity type, continue to be on the simplified taxation system with other types of activities that may belong to the segment of services in the electronic communications.
There are also facts of distribution of payments by business entities by the services types, which is confirmed by payment documents, into separate payments for subscriber service and payment for the Internet services, which probably indicates fragmentation of service providers both according to the taxation system and by categories of payers (legal and individuals-entrepreneurs).
State Tax Service draws the taxpayers’ attention to the need to comply with usage conditions of the simplified taxation system!
Legislation defines sufficient control measures that allow verification of the actual activity type, namely: analysis of RRO and register of tax invoices, implementation of control purchase of services, etc.
In case of confirmation of the facts of conduction of prohibited activity types during the stay of business entities on the simplified taxation system, effective measures will be taken by the controlling authorities, in particular, registration cancellation of the single tax payer by making decisions and exclusion from Register of the single tax payers. Such payers, who have violated usage conditions of the simplified taxation system, are deprived of a right to choose the simplified taxation system for four consecutive quarters from the moment of the controlling body’s decision. In addition, based on the documentary audit results, the corresponding amounts of monetary liability for taxes and levies will be determined.