After the changes in the work of the State Tax Service, the government will move to raising taxes. On December 27, the government adopted a reform of the simplified taxation system and, among other things, changes are expected for group 3 individual entrepreneurs.
According to the publication of Ekonomichna Pravda, the reform includes the following steps:
- Prohibition of the simplified taxation system for legal entities. The third group will be merged with the second one, and for legal entities in it, the tax rate will be gradually increased to 18% over three years; In the future, companies will be banned from using this system.
- Increase in the rates of the simplified taxation system for individual entrepreneurs. For individual entrepreneurs in the second and third groups (and, after the reform, in the unified second group), diversified rates will be introduced – from 3% to 17% of income, depending on the type of activity.
- Narrowing the first group of the simplified system. The number of activities that can be carried out under the simplified taxation system will be narrowed. The single tax for the first group will be revised: instead of a fixed amount, entrepreneurs will pay a percentage of income.
- The tax rates for the “simplified taxpayers” of the fourth group (agricultural producers) will be increased, and the tax base will be expanded. This should encourage companies to switch to the general taxation system.
- All “simplified taxpayers” will oblige to use cash registers and keep track of the origin of goods.
- Introduction of the progressive taxation scale PIT: one or two higher rates will be applied to the part of a person’s income that exceeds a certain level established by law. The size of these rates, as well as the income limits, are not yet known.
- Reform of the system of tax privileges and discounts. It is proposed to receive a refund of the tax paid for the costs of independent improvement of living conditions, own business, medical treatment, and education.
- Introduction of European rules of corporate income taxation (in particular, regarding the taxation of royalties).
- Harmonization of VAT legislation with EU directives. In particular, minimization of VAT exemptions, harmonization of rates and administration of this tax.
- Raising excise taxes on fuel, alcohol, and tobacco products to the minimum level of rates in force in the EU. In the future, the state will study the international experience of introducing a excise on sugary drinks. The latter is planned to be introduced in 2027.
- Increase the taxation rates of the environmental tax on carbon emissions (this measure is planned to be implemented after the war).
- Change of the property tax base. It is proposed to collect it from the estimated value of the property. This change may occur in 2027-2028. By that time, the state will have to establish property valuation processes and fill the registers with relevant data.
In addition, the strategy refers to conceptual changes. For example, it proposes to give local authorities more powers to administer local taxes and fees, as well as to introduce a systematic assessment of tax benefits. In particular, it is proposed to abandon some of them and focus the state’s attention on privileges for the processing industry instead.
The relevant changes will be implemented gradually over 2024-2030.
