How have taxes for sole proprietorships changed in 2024 and what to expect next?
The Ukrainian government has fixed a plan to increase taxes for individual entrepreneurs and set a new level of subsistence minimum and wages, which accordingly affected the amount of taxes for individual entrepreneurs of groups I-III. Find out how much individuals now have to pay and what other changes to expect in the near future
Ukraine has approved a plan to reform the taxation system as part of the overall National Revenue Strategy until 2030. This document defines the path of the state for the next 6 years. Direct changes in taxation will be approved in 2025-2027, but the authorities are already discussing possible options.
In addition, due to the increase in the minimum wage and the subsistence level in Ukraine, on January 1, 2024, the level of taxes for single taxpayers of groups I-III increased.
Read more about the changes for individual entrepreneurs that have already taken place and which should be expected in the near future in the article below.
Single tax rates for 2024
Starting from January 1, the monthly subsistence minimum for able-bodied persons is UAH 3028 and the minimum wage is UAH 7100. This is stated in Articles 7 and 8 of the Law of Ukraine on the State Budget of Ukraine for 2024.
And according to the Tax Code of Ukraine, the income limit for single taxpayers of groups I-III is calculated taking into account the minimum wage established by law as of January 1 of the tax year. Thus, the amount of taxes for individual entrepreneurs will also be increased starting from January 1, 2024.
Starting from January 1, the income limits for individual entrepreneurs will be determined by the following amounts:
▶ For the first group, the annual income will be UAH 1.185 million;
▶ For the second group - UAH 5.921 million;
▶ For the third group, the annual income is limited to UAH 8.285 million.
If these limits are exceeded, the individual entrepreneur is automatically transferred to another group.
The unified social contribution is 22% of the minimum wage. The amount of the unified social contribution will increase to UAH 1,562 in January and to UAH 1,760 in April.
The first group of sole proprietors pays a single tax of 10% of the subsistence minimum for able-bodied individuals. The second group pays 20% of the minimum wage.
But for the third group, the rate remains unchanged, namely: 5% for non-VAT payers and 3% for VAT payers.
Reforming the taxation system: what changes for individual entrepreneurs?
On December 27, the government approved the National Revenue Strategy until 2030, which provides for certain changes for individuals. First of all, the number of groups of the simplified taxation system will decrease, as the government is to merge the second and third groups into one.
Individual entrepreneurs in the first group of the simplified taxation system will pay tax as a percentage of income.
Individual entrepreneurs in the second group (combined) will also pay tax as a percentage of income. The amount will range from 3% to 17% of income, depending on the type of activity.
You can get legal advice on starting and running a business in Ukraine on our website. Visit Ukraine's lawyers will answer any questions and help you prepare constituent or other necessary documents. To sign up for a consultation or get full legal support, follow the link. Our team provides assistance to both Ukrainians and foreigners.
We remind you! The process of starting a business in Ukraine is quite simple, but it requires a comprehensive approach, taking into account the smallest details. Read what you need to start a sole proprietorship in Ukraine and how to do it the easiest way in our previous article.
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Ihor Usyk is the Head of Legal Department at Visit Ukraine
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