What are the differences between the simplified system of taxation and the general system..?

The general and simplified taxation systems differ primarily in the amount of taxes and accounting features. "Simplified" have restrictions on the amount of income and the number of employees (for certain groups). At the same time, these conditions can be considered optimal for micro and small businesses, due to which a significant number of individual entrepreneurs and legal entities in Ukraine choose this principle of accruals.

General taxation system

When choosing the general system, the FOP pays taxes on net income, that is, on the difference between revenue and documented expenses.

This system is required to pay taxes on net taxable income:

1. 18% - personal income tax, paid in advance payments by the 20th of the month following the quarter (by April 20, July and October, respectively);

2. 1.5% – military levy, paid at the end of the year;

3. 22% is a single social contribution, paid in quarterly advance payments no later than the 20th of the month following the quarter.

There is no income limit on the general system, but if it exceeds 1 million hryvnias in 12 months, you need to register as a VAT payer and pay this tax, as well as submit a monthly declaration.

Simplified tax system

When considering the choice of a simplified taxation system, first of all, it is worth keeping in mind that there are restrictions for some types of activities. Among such restrictions, it is worth noting all types of financial intermediation, production and sale of excise goods (except for the retail sale of beer and table wines), mining, production of precious metals, sale of antiques and some other types of activities.

It is worth noting that the simplified taxation system has its advantages, in particular, the simplified accounting of accounting data. However, it also has its limitations. The simplified system is divided into four groups, each of which has its own characteristics, such as permissible types of activities, the maximum amount of income, the maximum number of employees and other parameters.

1. The simplified system of taxation in the first group applies exclusively to individual entrepreneurs. It is characterized by a fixed amount of tax, which remains constant regardless of the amount of income received. The best example of such a simplistic person is a person who is engaged in retail trade in the market and works independently.

2. The simplified taxation system in the second group is also available only to individual entrepreneurs and involves a fixed amount of tax. Citizens in this category can engage in offline and online retail, provide various services (for example, smartphone repair or freelance), but are prohibited from entering into agreements with companies.

3. The simplified system of taxation in the third group is available to both individual entrepreneurs and legal entities. The basis of taxation is income, from which a fixed percentage must be paid. There are many opportunities in this variant of activity, in particular, various types of trade and provision of services, including cooperation with legal entities.

4. The simplified taxation system in the fourth group applies exclusively to producers of agricultural products (individual entrepreneurs or legal entities, for example, farms). The amount of the tax is determined on the basis of the normative monetary valuation of the land and the total area of the plots.