News about the revision of taxes for Ukrainian business is circulating online. Find out why the information about the tax increase for individual entrepreneurs is not true and what reforms will be implemented for entrepreneurs in Ukraine

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Recently, anonymous Telegram channels and media outlets have been spreading information about a possible tax increase for individual entrepreneurs (IEs). Manipulative headlines online claim that the Ministry of Finance of Ukraine is already working on raising tax rates for this category of entrepreneurs. However, this information is nothing more than a rumor with no real basis.

What did the Ministry of Finance actually say?

The Ministry of Finance of Ukraine has officially denied such rumors, noting that legislative changes to the simplified taxation system will be considered only after certain prerequisites are met. This means that any changes related to tax increases will not take place until a year after the measures to ensure the security of taxpayer data and access to information about their financial transactions in banks are completed.

According to the Ministry of Finance, this process will be transparent and open, with mandatory public discussions with business, the public and government authorities, as well as with the involvement of international partners. Only after these discussions are completed, the changes will be considered by the Verkhovna Rada of Ukraine and adopted at the legislative level.

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What exactly is proposed as part of the reforms?

The Ministry of Finance has prepared the National Revenue Strategy which includes reforms of the simplified taxation system (STS). First of all, it should be noted that the changes will not be immediately large-scale and will be implemented gradually. Several major changes are proposed to improve the system:

1. Increase in rates for legal entities

During the transition period, which will last three years, the single tax rates for legal entities of the third group will be gradually increased to the level of the corporate income tax rate, which is currently 18%. After this transition period, legal entities will be prohibited from using the simplified taxation system.

2. Combining the second and third groups of the STS for individual entrepreneurs

The plans envisage merging these two groups into a single group with differentiated tax rates. The scale of rates will include a minimum rate of 3% for trade, as well as higher rates of up to 17% for a number of services. This will allow for a more flexible approach to taxation of different types of business.

3. Revision of the list of activities of the first group of the STS

The list of activities in the first group is expected to be reduced, especially among high-margin businesses. This will allow focusing on those businesses that actually meet the requirements of this group.

4. Introduction of cash registers for STS payers

For individuals belonging to the united second group, it will be mandatory to use payment transaction registers (PTRs), both classic and software.

5. Increasing the threshold for VAT registration

For STS taxpayers, the VAT registration threshold will be equally applied to all entrepreneurs of this group, which will ensure a fairer and more transparent taxation system.

6. Changes for agricultural enterprises

Agricultural farms will remain in the fourth group of the STS, but the tax base for them will be expanded. For agricultural producers, the single tax rates will be increased within three years.

7. Cancellation of exemptions

The possibility of conducting business without the need to keep records and document the origin of the goods sold is canceled.

What does this mean for individual entrepreneurs?

As of today, despite the fact that the government is preparing changes to the taxation system, no immediate tax increases for individual entrepreneurs are planned. Legislative changes to increase rates will be gradual and will take into account the needs of businesses and citizens. In addition, it is important that this process involves public discussions and will not be implemented without consultation with all stakeholders.

For those planning to start or improve their business in Ukraine, you can always turn to professionals. Visit Ukraine lawyers will provide qualified assistance in legal matters related to business registration, changes in tax policy and other aspects of business activity in Ukraine. Contact us for a consultation to get answers to all your questions.

We remind you! All entrepreneurs who accept payment for goods or services are now required to generate fiscal receipts through POS terminals or software-based cash registers (PTRs). Read what innovations have been introduced and what fines are threatened to those who ignore the requirements of the law in our previous article.

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