Simplified taxation system for law firms: what you should know

Ukraine has two main systems of taxation of legal entities: general (income tax and VAT payers or those without) and simplified (single tax payers with or without VAT). The latter is usually the most suitable for a law firm.
When submitting documents for the registration of a legal entity, a law firm may indicate in the application for state registration of a legal entity (Form No. 2) on the additional page 9, information on the choice of the simplified taxation system (single tax group 3, select the tax rate in %), indicate the place of business, and determine the desired date of voluntary registration as a value added tax payer (until the sales volume reaches UAH 1 million). The procedure for selecting and applying the simplified taxation system with the payment of a single tax is set forth in Section XIV «Special Tax Regimes» of the Tax Code of Ukraine.
If, when submitting documents for state registration, a banking institution fails to indicate the choice of the simplified taxation system, such banking institution will be registered as a taxpayer under general conditions (income tax payer). Subsequently, in order to choose the simplified taxation system, an application should be submitted in the form approved by the Order of the Ministry of Finance of Ukraine dated 16.07.2019 No. 308.
According to the second paragraph of subpara. 298.1.2 of the Tax Code, business entities registered in accordance with the procedure established by law (newly established), which within 10 days from the date of state registration have submitted an application for the simplified taxation system and the single tax rate established for the third group, which does not provide for the payment of value added tax, are considered single tax payers from the date of their state registration. The transition to the simplified taxation system with the choice of the single tax rate may be made at the beginning of any quarter, but only once a year.
In view of the current version of Article 293 of the Tax Code, a law firm may be a single tax payer of the third group only. The following rates are set for the third group of single tax payers:
- 3% of income - if VAT is paid on a general basis;
- 5% of income - if value added tax is included in the single tax (more convenient and easier to understand).
The reporting period for single tax payers of the third group is a calendar quarter.
The reporting deadline is 40 calendar days after the end of the reporting quarter.
The deadline for paying the single tax is within 50 calendar days after the end of the reporting quarter.
By the way, December 15, 2023 is the last day to apply for the simplified taxation system starting from the first quarter of 2024.
The article was prepared by Dmytro Khutornyi, Deputy Chairman of the UNBA Committee on Legal Practice.
Popular news

Guarantees of the practice of law
The Verkhovna Rada is waiting for the Minister of Justice to take action on signing the Convention on the protection of t…
Ukraine, which was directly involved in the preparation of the world's first Council of Europe Convention on the protection of the profession of advocate, has still not signed it. There appear to be no formal objections, but no real steps have been taken towards accession either.

Legislation
Support for the defense industry should not upset local budgets, - UNBA
It is necessary to create additional incentives for enterprises in the defense and industrial complex, while ensuring the balance of the budget system and the predictability of both revenues and expenditures of local self-government.

Legislation
UNBA warns of extreme financial risks for defense industry companies
The lack of transparent control over the activities of the Ministry of Defense as a regulator, as well as excessive sanctions for leaving the Defense City regime, create risks for defense enterprises that could lead to their bankruptcy.

Guarantees of the practice of law
BCU reports interference by a member of the High Council of Justice in the activities of a lawyer and submits officia…
The Bar Council of Ukraine, having considered the statement of advocate Oleksandr Vikhrov, established the fact of interference by Roman Maselko, a member of the High Council of Justice, in the advocacy activities, violation of attorney-client privilege, and exceeding his powers in evaluating a candidate for the position of judge.

Self-government
BCU selected candidates for membership of the Competition Commission for the selection of members of the HQCJ
In accordance with Article 95-1 of the Law of Ukraine «On the judicial system and status of judges», the Bar Council of Ukraine proposed three candidates to the High Council of Justice for consideration as members of the Competition Commission to conduct a competition for the position of member of the High Qualification Commission of Judges of Ukraine under the BCU quota.

Legislation
DIC and customs control: advocates warn against the risks of draft law No. 13421
Ukrainian defense companies face bureaucratic delays in importing components, which could critically affect the timing of government contracts. At the same time, the mechanism proposed in the Verkhovna Rada creates risks that could outweigh the potential benefits for the industry.

Educational events
Advocates were taught how to distinguish fatigue from exhaustion
Mental health is a topic that still sounds abstract to many people. But in the legal profession, it is a daily reality: stress, high workloads, responsibility for other people's lives.

Discussion
Partnership for reconstruction: UNBA discusses new law on PPPs
Public-private partnerships are considered one of the key tools for Ukraine's recovery, but in practice, their mechanisms remain complex, poorly understood, and often ineffective.
Publications

Ihor Kolesnykov A BRIEF SUMMARY REGARDING THE APPLICATION OF THE ORDER ON EXTENDED CONFISCATION IN LATVIA REGARDING FINANCIAL ASSETS OF…

Valentyn Gvozdiy WORKING IN A WAR ZONE

Lydia Izovitova Formula of perfection

Sergiy Vylkov Our judicial system is so built that courts do not trust advocates

Iryna Vasylyk Advocacy in the proclamation of Independence of Ukraine

Oleksandr DULSKY When we cross the border of the Supreme Anti-Corruption Court, we get into another department of the National Anti-Corruption…

Vadym Krasnyk The UNBA will work, and all obstacles and restrictions are only temporary inconveniences

Lydia Izovitova Interview with Lydia Izovitova on the occasion of the 8th anniversary of the founding of UNBA: We are the voice of t…