Ukrainian IT specialists have earned a high reputation and are appreciated all around the world. Due to this, the IT industry in Ukraine in recent years has grown significantly and begun to attract more and more attention from government authorities, including fiscal ones.
Many IT specialists in Ukraine work as individual entrepreneurs (FOP) on a single tax. Until recently, this situation was acceptable to all: IT specialists honestly paid taxes with a minimum of paperwork.
But soon the status quo will change - by the bill of the Verkhovna Rada of Ukraine №10094, that must secure a separate (fifth) group of the single tax exclusively for IT. And they will pay twice more taxes than the rest of the taxpayers!
Who will be subject to the single tax group 5?
It will include FOPs, who will perform one of the following activities:
- computer programming, consulting and related activities;
- data processing and placing it on web portals;
- production of computer games and other software.
FOPs will belong to the fifth group, only if they will not use the labor of employees and their income should not exceed 7.5 million UAH per year. But at the same time they will have the right to use in their work equipment and offices that belong to other legal entities and individuals, without entering into an employment contract with them.
Expected tax rates
In general, IT specialists will pay taxes in the amount of 10% - this is twice more than the current tax rate on the third group.
The good news is that the rate increase will not be immediate, but will be introduced in several stages:
-5% of income from January 1, 2020;
-6% of income from January 1, 2021;
-7% of income from January 1, 2022;
-8% of income from January 1, 2023;
-9% of income from January 1, 2024;
-10% of income from January 1, 2025.
You should also note that if the annual income of the 5th group exceeds UAH 7.5 million, it is proposed to establish a tax rate of 15%.
As we see, by 2025 the tax rate for FOP will rise up to 10% and it is assumed that in this way tax revenues to the budget will increase.
Of course, new tax rates can cause a lot of complaints and criticism from representatives of the IT industry. But as for the government authorities, it is expected that these innovations will increase the income tax revenues to the budget and reduce investors' uncertainty about the future business environment in Ukraine, which will promote the further development of the IT industry.
SBSB specialists are helping IT companies to do business all around the world. We have many years of experience not only in the registration of IT companies, but also in optimizing the tax burden for them. If you contact SBSB, you are guaranteed to receive the best service - we will be happy to advise you on all the legislative innovations and choose the most effective solution for your problems.