How do you choose the best tax regime for your business?

Choosing the right tax system for your business is one of the key factors in generating profit. Entrepreneurs are guided by various factors when selecting a particular system. If the chosen method of paying taxes proves too costly, it can be switched to a more suitable one. To avoid making a mistake, it is best to consult with experienced specialists.

What influences the choice of taxation system?

Under Ukrainian tax legislation, there are two tax payment systems: the simplified (single tax) system and the general system. The state does not insist on a specific choice; the entrepreneur selects the appropriate system based on the nature of their business. However, this choice must not contravene existing legislation.

Factors influencing the choice of tax system:

• Annual turnover. Companies operating under the single tax system may have an annual turnover of no more than 5 million. Moreover, this does not apply to the company’s profit. General tax payers face no such restrictions.
• Type of activity. There are restrictions on the use of the single tax regarding the type of activity, payment methods, etc. All entrepreneurs can pay the general tax. For example, single tax payers cannot use non-monetary forms of payment. If a firm has transit amounts in its cash receipts, these should be excluded from the tax base (which can sometimes be problematic).
• Number of employees. Under Ukrainian law, firms on the single tax system cannot have more than 10 employees in a single year. Companies on the general tax system may have a larger number of employees.

There are many other nuances within each tax system, which a lawyer can help you navigate. If you are unsure which tax system to choose or wish to switch to a different one, you should seek professional advice. Contact Svarog – our lawyers will analyse your organisation’s operations and help you determine the most advantageous tax system!Choosing the right tax system for your business is one of the key factors in generating profit. Entrepreneurs are guided by various factors when selecting a particular system. If the chosen method of paying taxes proves too costly, it can be switched to a more suitable one. To avoid making a mistake, it is best to consult with experienced specialists.

What influences the choice of taxation system?

Under Ukrainian tax legislation, there are two tax payment systems: the simplified (single tax) system and the general system. The state does not insist on a specific choice; the entrepreneur selects the appropriate system based on the nature of their business. However, this choice must not contravene existing legislation.

Factors influencing the choice of tax system:

• Annual turnover. Companies operating under the single tax system may have an annual turnover of no more than 5 million. Moreover, this does not apply to the company’s profit. General tax payers face no such restrictions.
• Type of activity. There are restrictions on the use of the single tax regarding the type of activity, payment methods, etc. All entrepreneurs can pay the general tax. For example, single tax payers cannot use non-monetary forms of payment. If a firm has transit amounts in its cash receipts, these should be excluded from the tax base (which can sometimes be problematic).
• Number of employees. Under Ukrainian law, firms on the single tax system cannot have more than 10 employees in a single year. Companies on the general tax system may have a larger number of employees.

There are many other nuances within each tax system, which a lawyer can help you navigate. If you are unsure which tax system to choose or wish to switch to a different one, you should seek professional advice. Contact Svarog – our lawyers will analyse your organisation’s operations and help you determine the most advantageous tax system!