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New rules of Ukrainian simplified taxation system will be applied after the 25th of January

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All payers of single or fixed tax as well as legal entities and sole traders that were taxed under general taxation system and want to transfer to simplified taxation system since 01.01.2012 must submit a request for application of simplified taxation system until the 25th of January 2012.

Let’s examine this legal issue in details. Such requirements are set by Subsection 5 of Transitional provisions of Law “On amendments to the Tax Code of Ukraine and other legal acts of Ukraine related to simplified system of taxation, auditing and reporting” and are required to secure and obtain right to be taxed under simplified system.

But before filing such request one should find out whether he is entitled to choose simplified taxation system after the 1st of January 2012. From now on you cannot be taxed under simplified system if you perform mining and sale of minerals; mining, production and /or sale of precious metals and jewels; sale of art objects and antiques; organization of concert tours and other activities listed in Subsection 291.5.1. of the Tax Code. Simplified taxation is also not applied to non-residents; securities registrars; units of legal entity that is a payer of single tax; persons with a tax debt. Also you cannot be taxed under simplified system if you are a sole trader that performs activities related to audit, lease land plots that have area greater than 0,2 hectares, residential premises with total area over 100 square meters and/ or non-residential premises with total area over 300 square meters; conduct technical tests and researches.

If you and you type of activity are entitled to simplified taxation system it should be defined what group of single tax payers you will be included in. Requirements for each of 4 groups of single tax payers are stipulated in Art.291 of the Tax Code and depend on type of economic activities, client base, number of employees and the amount of annual revenue. The first three groups are available for sole traders, the forth one is for legal entities.

Besides the group payers of a single tax should find out about and chose rate of a single tax. For payers of the first and second groups these rates are set by local authorities in percents from minimum wage. In Kiev for example based on the decision of Kiev Council number 722/6958 dated 01.12.2011 these rates are set at the highest possible level: 10% of minimum wage for the first group (as of today it equals to 107, 3 UAH) and 20% for the second group (as of today it equals to 214, 6 UAH).

Single tax payer of the third and fourth groups should choose between 3% single tax rate without VAT and 5% rate with included VAT. Both rates are levied based on income and not on profit of single tax payer.

After one has chosen the group and single tax rate he can file a request for application of simplified taxation system in accordance with a form approved by the Order of the Ministry of Finance of Ukraine number 1675 dated 20.12.201. The request should contain the following:

  • Naming or full name;
  • Code of the Unified State Register or ITIN;
  • Information of certificate of state registration or an extract from the Unified State Register which confirms registration;
  • Tax address;
  • Location of economic activities conduction;
  • Single tax rate;
  • Number of employees;
  • Types of activities (based on Types of economic activities SC 009:2005 and not SC 009:2010);
  • Information about tax debt (if there is one certificate issuance may be denied).

Those who transfer to simplified taxation system from general system of taxation must additionally provide information about the amount of income of the previous year and calculation of the income as well as the date of transfer to simplified taxation system.

Certificate of single tax payer is issued by a body of State Tax Service free of charge within 10 days since the moment when a taxpayer filed a request about selection and transfer to simplified taxation system. Its validity tem is unlimited. Previously issued single tax payment certificates will be valid for the period until a new certificate is obtained but not later than the 1st of June 2012

Payment of single tax for December of 2011 and January of 2012 must be completed until the 20th of January. Since payment of tax for 2011 is performed in accordance with regulations of the Decree of the President “On simplified system of taxation, auditing and reporting of small business entities” which provides that payment is to be completed until the 20th day of month which follows the report one. And for January in accordance with provisions of the Tax Code of Ukraine the payment of single tax is to be completed until the 20th day of current month.

The article has been prepared by attorneys of Taxation practice.


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