Permitted activities for group 3 single tax

What are the activities of IE 3 groups?

In Ukraine, a IE (individual entrepreneur) can engage in various activities depending on what activities are indicated in his statement of registration in the USR.

However, it can be said that in accordance with the classification of types of economic activities (CTEA) of Ukraine, the main groups of types of activities that sole proprietors can engage in include:

1. Manufacture of goods: this group includes activities related to the production of goods, for example, the production of textiles, food, metalworking, other;
2. Provision of services: this includes activities related to the provision of various services, such as transportation, car repair and maintenance services, cleaning of premises;
3. Trade: this group includes activities related to the sale of goods, wholesale, retail. This group may also include services related to trade, for example, services for the delivery of goods.

This is not a complete list of activities that IE 3 groups can engage in in Ukraine, since you can register for any activity that is not prohibited by the legislation of Ukraine.

For more detailed information about CTEA for sole proprietors of the 3rd group, we recommend that you look at the website: kved.com.ua

Why is a single tax allowed for all types of activities of IE 3 groups?

A single tax for all types of activities of IE Group 3 was introduced in Ukraine to simplify taxation and stimulate the development of entrepreneurship in the country.

This taxation system allows self-employed individuals to pay tax on their income as a fixed amount, instead of having to calculate tax based on actual income and expenses (credit/liability). This simplifies reporting for small businesses, especially for those who are just starting out without having enough experience in financial accounting and the ability to hire a good accountant.

Also, a single tax can reduce the tax burden on small businesses, which makes it more competitive in the market, stimulating its development. This contributes to the creation of new jobs and the growth of the economy as a whole.

Despite the fact that the single tax is a simplified system of taxation, it has its limitations and is not suitable for all types of activities. Therefore, if a sole proprietor does not meet the requirements of a single tax, he can choose another taxation system, such as a general taxation system or a value added tax.

What are the prohibited activities for group 3 singles?

There are restrictions on the types of activities that can apply the single tax rate within the framework of the 3 groups of the single tax in Ukraine. Some activities may be prohibited or restricted due to their nature and degree of risk. For example:

1. Banking and insurance services;
2. Extraction of minerals;
3. Organization of gambling games and lotteries;
4. Transportation of cargo and passengers by air transport;
5. Production and storage of explosives;
6. Works in the field of nuclear energy;
7. Works related to the use of narcotic substances and psychotropic substances;
8. Works related to the use of radioactive materials.

If a IE, LLC or PE is engaged in an activity that is prohibited for the application of a single tax rate, then he must choose a different taxation system, for example, the general taxation system or VAT. In addition, there are other restrictions that depend on the region and type of activity, therefore, before registering a company, it is recommended to seek advice from a tax specialist in order to choose the most appropriate taxation system for a particular business. For example, to the LF “CENAT”.

How to register activities for IE group 3?

In order to register activities for IE group 3 in Ukraine, you must complete the following steps:

• Decide on the types of activities that meet the requirements of group 3 of the single tax. To do this, you can use the official list of activities published on the website of the State Tax Service of Ukraine;
• Register IE at the ASC at the place of residence or at the place of business registration. To do this, you must provide a package of documents, which includes an application for registration indicating the relevant CTEA (classifier of types of economic activity) and the single tax rate, IE passport, TIN, documents for the right to use the premises (legal address or Registration of residence), other documents, in depending on the type of activity;
• Get an inventory, later an extract of registration as a sole trader, where all the declared types of activity, including the main one, will be indicated.

After registration, an entrepreneur can start his business and pay a single tax at a rate of 5% every quarter. If necessary, the IE can change the types of activities, delete or add new ones, making appropriate changes to the USR at a private notary and a state registrar.

What can be the turnover of IE 3 groups?

The turnover of IE 3 groups depends on the type of activity that is registered with the State Tax Service of Ukraine. Each type of activity has its own turnover threshold, not exceeding which the individual entrepreneur can remain on the single tax of the 3rd group. Turnover thresholds are regulated by the legislation of Ukraine and may change from time to time.

For example, for 2023, the turnover threshold for FOP Group 3 is 7.818.900,00 UAH. But for some activities, additional VAT may be charged.

Thus, if the IE does not exceed the annual income established for the corresponding type of activity, then it can remain on the single tax of the 3rd group. If the turnover exceeds the established threshold, then the FOP will have to switch to another taxation system in accordance with the legislation of Ukraine.