Tax Leave for Sole Proprietors: How a Mistake Can Cause Loss of the Benefit
Individual entrepreneurs of groups I and II of the single tax who work without hired employees can exercise the right to tax leave. This was reminded by the Main Department of the State Tax Service in the Kyiv region.
According to paragraph 295.5 of article 295 of the Tax Code of Ukraine, such entrepreneurs may be exempted from paying the single tax for one full calendar month per year.
The State Tax Service noted that tax leave is granted only for a full calendar month—from the first to the last day. If the application specifies only part of the month, the exemption from paying the single tax will not apply, and the tax must be paid in the usual manner. This right can be used only once per year.
The tax service also emphasized that tax leave does not apply to single tax payers of groups III and IV, as well as to entrepreneurs of groups I and II who employ hired workers. In such cases, it is considered that business activity continues, so there are no grounds for exemption from tax payment.
One of the mandatory conditions is the complete absence of business activity during the tax leave. If during this period the entrepreneur receives income or carries out operations involving the supply of goods or services, they lose the right to exemption from paying the single tax, and tax liabilities are calculated in full.
Additionally, according to subparagraph 1.13 of paragraph 16¹ of subsection 10 of section XX of the Tax Code, entrepreneurs of groups I and II without hired employees are also exempt from paying the military levy during the tax leave period—for one calendar month per year.
To arrange tax leave, it is necessary to submit an application in free form to the controlling authority in accordance with subparagraph 298.3.2 of paragraph 298.3 of article 298 of the Tax Code of Ukraine. The State Tax Service recommends submitting such an application before the start of the leave to avoid violating the deadlines for paying tax liabilities.
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