Simplified Tax System's Second Group Under Threat
Economist Danylo Monin, speaking on political analyst Yuriy Romanenko's broadcast, warned that a planned tax reform jeopardizes the existence of the second group of Ukraine's simplified taxation system. He explained that while the reform formally raises the annual turnover limit for this group to 4 million hryvnias, it does not make the scheme more advantageous for entrepreneurs. This simplified system is a popular option for many small businesses and sole proprietors in Ukraine.
Monin stressed that with a typical 15% trade margin, revenue from such turnover would be about 600,000 hryvnias per year.
"But when you still need to deduct rent, product delivery, logistics, and the taxes themselves, engaging in trade becomes practically impossible," the economist noted.He also emphasized that individual entrepreneurs without hired employees are obligated to pay the state approximately 50,000 hryvnias.
New Tax Reform's Impact on Small Business
Danylo Monin believes this situation fosters a persistent view that entrepreneurship under such constraints is pointless.
"In effect, this draft law kills off the middle class of small entrepreneurs," he underscored.These comments point to serious risks for small businesses under the planned changes to the tax system.
The planned tax reform could significantly impact small business in Ukraine, as the new taxation terms may complicate entrepreneurial activity. Merely raising the turnover limit does not solve core problems faced by entrepreneurs, such as high operational costs and tax burdens. This could lead to a reduction in the number of small enterprises, which would, in turn, affect the country's economic situation by lowering employment levels and hindering the development of the middle class.
As the debate around tax reforms intensifies, concerns are also growing regarding the potential implications of the new combined tax abuse regulation proposed by Ukraine's Finance Ministry. This regulation could further complicate the landscape for small businesses, adding to the challenges highlighted by economist Danylo Monin. Understanding these developments is crucial for entrepreneurs navigating the evolving tax environment.