How to switch to 2% single tax in wartime

Single tax, what is it?

When making a purchase in a store, every citizen of Ukraine or a guest of our country sees a line in the cashier’s check that informs about the payment of VAT by the client in the amount of 20 percent of the purchase amount. The outlet, in turn, begins to use the paid state fee in its turnover and may not transfer the money collected from buyers to the country’s budget until a tax credit appears in the declaration. This is if you register LLC with VAT!

As for the single tax on turnover, everything is much simpler here. At the end of the reporting period, it can be a month or a quarter, the entrepreneur indicates the amount earned in the online account and pays a certain part of it to the state budget without reducing income, costs and salaries. If you register IE!

Why switch to 2% single tax?

According to the amendments to the Tax Code of Ukraine, business entities whose annual turnover does not exceed ten billion hryvnias can switch to a simplified system with a rate of two percent. Basically, this opportunity is used by small businesses, which had a rate of five percent. At first glance, it seems that the filling is not worth the candle, but even a slight indulgence makes life easier for business, especially during martial law. In extreme cases, the money saved can be sent directly to the Ukrainian armed forces, bypassing the complex, bureaucratic state machine.

Consider the advantages of a simplified system using the example of a small business. If a person has a quarterly turnover of one hundred thousand hryvnias, he must pay five thousand hryvnias to the treasury, and from April 2022 only two thousand hryvnias. At first glance, the difference does not seem significant, but during the period of hostilities, every penny counts for people.

What is the procedure for switching to 2% single tax?

The process of changing the tax rate is not very complicated, an accountant or any other person with the skills to work in the online office of a legal entity through a key with an electronic signature can easily handle it.

Step-by-step instructions for those who are already on a simplified system:

1. We go to the item on the introduction of reporting;
2. Press the create button, select the profit section;
3. Click on the application for the application of the simplified system;
4. In the state of the document, put a mark reporting and check whether the details of the fiscal service of your area are correct;
5. In the header, put a cross that changes are being made;
6. In clause 5.2. write your current group and report that you are switching from a rate, for example, 5% to 2%, without registering as a VAT payer (required);
7. In paragraph 6, write, for example, the provision of services on the territory of Ukraine or trade;
8. In paragraph 7, indicate the number of employees;
9. In paragraph 8, write the types of economic activities that your legal entity carries out.

Important! If a business entity has debts to the budget for previous periods, then a change in the rate may be refused, especially with regard to the social contribution for hired employees.

How did it all end?

On August 1, 2023, despite the fact that the war continued, the 2% Single Tax rate in Ukraine was cancelled and 5% was returned. Moreover, from October 1 (backdated calendar) the Supreme Council introduced an additional tax in the form of a 1% military tax, which all individual entrepreneurs began to pay from January 1, 2025!