Taxation of enterprises

The legislator constantly makes changes to the Tax Code of Ukraine regarding the payment of taxes, the rules of conducting economic activities, as well as the rules of reporting for the period of martial law. He argues that all amendments to the provisions of the Tax Code of Ukraine are introduced with one goal – to ensure the stability of the taxation system and support business in wartime.

2024 was no exception in terms of changes in the taxation of income of individuals and businesses, as well as a number of innovations for employees and their employers. This includes E-residency, new reporting forms, changes in tax amounts, changes in the minimum wage (MW) and subsistence level (LW), changes in the single tax, annual income for individual entrepreneurs and its limits. Many indicators – taxes, fees, limits for private entrepreneurs depend on the size of the established minimum wage and the cost of living, which are enshrined in the Law of Ukraine “On the State Budget of Ukraine for 2024”

On January 1, 2024, the Law of Ukraine dated November 9, 2023 No. 3460-IX “On the State Budget of Ukraine for 2024” entered into force (hereinafter – Law No. 3460

Law No. 3460 establishes that the minimum wage will be:

• from January 1, 2024 – UAH 7,100.
• from April 1, 2024 – UAH 8,000

In an hourly rate: from January 1 – UAH 42.6, from April 1 – UAH 48.

The living wage per person per month from January 1, 2024 will be:

• The total figure is UAH 2,920.
• Children up to 6 years old – UAH 2,563.
• Children from 6 to 18 years old – UAH 3196

Employed persons – UAH 3,028.

Persons who have lost their ability to work – UAH 2,361. During 2024, the size of the subsistence minimum will remain unchanged.

The simplified taxation system (STS), the same as a single tax, differs significantly from the general system. Both legal entities and individuals can choose a simplified system. Business entities that use it pay taxes on their total income, but expenses are not taken into account. In this regard, the tax burden is reduced and accounting costs are significantly reduced. Thanks to this feature, tax and accounting accounting is simplified.

Entrepreneurs using the simplified tax system pay less taxes due to low tax rates. This, in turn, allows you to increase profits significantly. A larger number of entrepreneurs can now enjoy this privilege, since since 2013 the use of the simplified tax system and the single tax (UT) has extended to several groups at once. The main limitation of working on a simplified system is exceeding your limits when receiving income, hiring more workers than required, or receiving income from a class that is prohibited for a certain group. For violation of the law, the tax office automatically transfers to the general system.

The simplified taxation system of Ukraine provides for a variety of tax rates. But in order to clearly identify single tax payers, it is important to understand that there are:

• 1, 2 and 3 groups – physical entrepreneurs and enterprises that have chosen STS;
• 4th group – enterprises, agricultural tax payers.

Organizations and enterprises that are engaged in:

• lottery and bookmaking business;
• providing communication services;
• activities aimed at managing enterprises;
• currency exchanges;
• extraction and sale of minerals;
• extraction, production and sale of precious materials and organic matter;
• trades (auctions) of art objects, antiques, etc.;
• production and sale of excisable products;
• financial intermediation (not counting insurance activities);
• organization of touring events.

In addition to the above, the use of the simplified taxation system is limited to:

• for leasing, insurance and financial and credit organizations, pension and investment funds, etc.;
• on persons who are involved in the registration of securities;
• on organizations, share of legal capital. persons taxpayers whose EN is 25% or less;
• to representative offices and branches of an organization of a person who does not pay the unpaid tax;
• to foreign organizations.

Single tax rate in 2024:

• for payers of group 1 – 302.8 UAH (10% of the subsistence level – 3028 UAH);
• for payers of group 2 – 1,420 UAH (20% of the min. ZP on January 1 of the current year);
• for payers of group 3 – the amount has not changed:

1. 3% of income for VAT payers;
2. 5% of the income for VAT evaders;

• for group 4 payers – depending on the area and characteristics of the land plot, the amount may vary.

According to paragraphs 2 p. 292.1 of the PKU, the income of an LLC on the EP is any income, including the income of representative offices, branches, departments, received during the tax (reporting) period in:

• in monetary form (cash and/or non-cash);
• in tangible or intangible form.

The amount of income includes:

The income of the person paying the Unified Social Security does not include:

• loan amount;
• any financial assistance that was returned during the year;
• value added tax;
• contributions to the authorized capital;
• any dividend received by a person;
• any transit amount (for example, commission, agency agreement, etc.);
• return of products or funds in accordance with the contract (its termination, return under warranty, etc.);
• license fee;
• insurance payment;
• profit received from the sale of non-commercial property.

But besides this, there are also a number of features that determine profit. For example, income is the difference between the book value and the sales value, if we are talking about the sale of fixed assets. When selling personal property, income is defined as the sum of funds received from their sale. If fixed assets are sold after their use within 12 calendar months from the date of commissioning, income is determined as the difference between the amount of funds received from the sale of such fixed assets and their residual book value as of the date of sale.

• minimum unified social contribution – 1,760 UAH (22% of the minimum salary);
• maximum – 26,400 UAH per month (22% of 15 minimum wages).

An entrepreneur must be registered as a VAT payer if he chooses a single tax rate of 3% (group 3). In this case, the VAT tax rule, which is characteristic of the general taxation system, will apply.

1. The report, as well as payment according to the Unified State Tax Code, must be made quarterly.
2. Calculation and payment of salary every month and reporting is shocking

Enterprises and organizations using the simplified tax system are required to calculate and withhold each fee from an employee’s salary.

To understand what the general tax system in Ukraine is, you need to take a closer look at the main rates and taxes paid by enterprises within this system:

1. Income tax. Only a legal entity, both residents and non-residents, can act as a tax payer. The tax base is calculated as the difference between the income from the activities of the enterprise and the sum of all expenses of the taxpayer. It can be either positive – income, or negative – loss.

The corporate tax rate in 2024 is affected by the type of activity and membership in a certain category of taxpayer. The base rate is 18% (clause 136.1).

Income tax is paid in normal terms:

• quarterly payers within 40 days after the end of the quarter. For the 4th quarter – 60 thousand days;
• annual income tax payers declare within 60 days after the end of the year. The last reporting day is 03/01/2024.

Single tax taxpayers who switched to the general taxation system have a reporting period from the date of transition to the OSN until December 31 of that year.

All payers have a deadline of 10 days from the last date of filing the declaration to pay income tax.

From 2023 enterprises that trade foreign currency assets in cash are required to pay advance contributions from income tax for each exchange office as of the 1st day of the current month.

The amount of the advance payment is fixed:

• three minimum wages (20,100 UAH), if the exchange office is located in a locality where more than 50,000 people live;
• one minimum salary (6,700 UAH), if the exchange office is located in a locality where less than 50,000 people live;

2. Tax on dividends. The rate of this tax is:

• 5% – in case of payment of dividends by a legal entity that pays income tax;
• 9% – in case of payment of dividends on shares or investment certificates, corporate rights accrued by non-residents, joint investment institutions and single tax payers. Payment is made using advance payments.

3. VAT. Deducted from part of the cost of products, work or services, to which is created at each stage of the process of manufacturing a product, work or service. It is calculated as the difference between the amount of added value for the person who buys the product and the amount of added value that the company receives after the sale. The base rate is 20%.

You can register as a VAT payer voluntarily if your annual income does not exceed 1 million hryvnia. Otherwise, the procedure is mandatory.

Reports on payment of this tax are submitted monthly and electronically, as is the payment itself.

4. Single social contribution (USC). Paid from net income – 22% but not more than 15 minimum wages.

5. Personal income tax. Withheld from the salaries of employees at the enterprise in the form of 18%. Submission of reports quarterly, payment at the time of salary payment.

6. Military gathering. Mandatory military duty is withheld from the employee’s salary. Its rate is 1.5%.