The State Tax Service of Ukraine has published a detailed explanation of the rules governing individual entrepreneurs\u2019 participation in the simplified taxation system, emphasizing clear legislative restrictions on types of activities, income limits, and criteria for hired personnel.<\/p>\n\n\n\n
As the tax authorities point out, not every type of business activity is compatible with the status of a single-tax payer.<\/p>\n\n\n\n
Requirements for Groups 1, 2, and 3 of Sole Proprietors<\/strong><\/p>\n\n\n\n Group 1: <\/strong>Intended exclusively for entrepreneurs without hired staff who engage in retail trade from market stalls or provide consumer services to the public. The maximum annual income must not exceed 167 times the minimum wage established by law as of January 1 of the reporting year.<\/p>\n\n\n\n Group 2: <\/strong>Intended for businesses that manufacture or sell goods, operate in the restaurant industry, or provide services to the general public or other single-tax payers. The permitted number of employees is no more than 10 at any given time (or no employees at all). Annual income is capped at 834 times the minimum wage. In this group, it is prohibited to provide brokerage services for the purchase, sale, and rental of real estate; internet service provider activities; as well as the production and sale of jewelry made from precious metals and gemstones.<\/p>\n\n\n\n Group 3:<\/strong> A universal group with no restrictions on the number of registered employees. The annual income threshold is 1,167 times the minimum wage.<\/p>\n\n\n\n Activities Strictly Prohibited for \u201cSingle Taxpayers\u201d<\/strong><\/p>\n\n\n\n According to the provisions of the Tax Code of Ukraine, the simplified tax system is strictly prohibited for entrepreneurs engaged in:<\/strong><\/em><\/p>\n\n\n\n \ud83d\udc49\ud83c\udffforganizing and conducting gambling, lotteries, and betting, as well as foreign currency exchange operations;<\/p>\n\n\n\n \ud83d\udc49\ud83c\udfffthe production, export, import, and sale of excise goods (except as provided by law);<\/p>\n\n\n\n \ud83d\udc49\ud83c\udfffthe extraction, production, and sale of precious metals, gemstones, and minerals;<\/p>\n\n\n\n \ud83d\udc49\ud83c\udfffactivities in the field of financial intermediation;<\/p>\n\n\n\n \ud83d\udc49\ud83c\udfffprovision of postal services (excluding courier delivery) and communications\/telecommunications services;<\/p>\n\n\n\n \ud83d\udc49\ud83c\udffftrade in antiques and art, and the organization of auctions;<\/p>\n\n\n\n \ud83d\udc49\ud83c\udfffactivities related to organizing touring events, conducting technical audits, and research.<\/p>\n\n\n\n Limits on Real Estate Leases and Financial Restrictions<\/strong><\/p>\n\n\n\n The Tax Service draws particular attention to entrepreneurs who lease real estate. The simplified tax regime is revoked if the maximum area limits for the following properties are exceeded:<\/p>\n\n\n\n \ud83d\udc49\ud83c\udfffland plots\u2014more than 0.2 hectares;<\/p>\n\n\n\n \ud83d\udc49\ud83c\udfffresidential premises and\/or parts thereof \u2014 more than 400 square meters;<\/p>\n\n\n\n \ud83d\udc49\ud83c\udfffnonresidential buildings and structures (or parts thereof)\u2014over 900 square meters.<\/p>\n\n\n\n In addition, under no circumstances may non-residents of Ukraine, financial institutions, pawnshops, credit unions, or entrepreneurs who, as of the date of application, have outstanding tax liabilities (with the exception of uncollectible debt resulting from force majeure circumstances).<\/p>\n\n\n\n