Zelenskyy signs law that provides for the complete abolition of the two percent single tax

Ukrainian President Volodymyr Zelenskyy has signed a law that provides for the complete abolition of the two percent single tax (ST). According to the changes envisaged by draft law No. 8401, the 2% UT will be abolished starting from August 1, 2023, and inspections for excisable goods such as alcohol, tobacco, fuel, as well as for gambling and financial services will be partially restored.

The Deputy Chairman of the Committee, Yaroslav Zheleznyak, emphasized the importance of signing this law as a condition of the agreement with the International Monetary Fund (IMF). This decision is part of the government's efforts to reform the economy and facilitate business in Ukraine.

The main provisions of the draft law on the transition from the 2% EP are as follows:

Taxpayers who have been subject to the 2% EP will have the opportunity to apply for a waiver of this tax and indicate which taxation system they want to switch to. If such an application is not submitted or if another taxation system is not specified, taxpayers will automatically switch to the taxation system that was applied before the introduction of the 2% UT.

New business entities that have chosen the 2% STS after state registration will automatically be considered to be STS payers of the third group with a 5% rate.

The rights and obligations of value added tax (VAT) payers whose VAT registration was suspended will be automatically restored.

Taxpayers who switched from the 2% STS to the general taxation system in 2023 will be entitled to switch back to the simplified taxation system in the same year if they apply by 1 September 2023. In this case, the taxpayers will be considered to be STS payers from August 1, 2023.

It is worth noting that the introduction of the two percent single tax in March 2022 helped to support Ukrainian business during the difficult period associated with the military conflict. However, given the strengthening of the economy and the need to ensure sustainable development, it was decided to completely abolish this tax.

However, the law also takes into account some aspects of control over excisable goods, gambling and financial services. Starting from October 1, 2023, liability for violations in the use of payment transaction registers (PTRs) will be restored. However, companies will be exempted from financial liability for violations with cash registers, except when such violations relate to trade in excisable goods and occurred in the frontline areas, including areas of possible hostilities.

The Law also provides that the period from April 1, 2022 to July 31, 2023, when technical debts in electronic offices arose, will not be taken into account when determining the right of taxpayers to continue using the simplified taxation system.

The draft law on the abolition of the two percent single tax will promote the growth of entrepreneurship and the development of the country's economy by creating favorable conditions for entrepreneurs and ensuring a stable payment base for state needs. Taking into account the control measures over excisable goods and financial sectors, this decision will contribute to positive economic growth and development of Ukraine.