How can you organize a joint venture with other FOPs?

Representatives of the tax service were asked about the eligibility of an individual entrepreneur (FPO) paying a single tax to enter into an agreement on joint activity without creating a legal entity with another sole proprietorship that also pays a single tax.

In the DPS letter dated September 1, 2021 No. 3215/IPK/99-00-04-03-03-06 there are no comments regarding the possibility of such an action.

The tax authorities came to the conclusion that natural persons - entrepreneurs who pay a single tax, have the right to enter into agreements on joint activities without creating a legal entity with other business entities.

However, these natural persons - entrepreneurs should take into account that the types of activities within the framework of such contracts must correspond to the types of activities for which the simplified taxation system can be applied.

If the agreement on joint activity is not registered with the regulatory authorities, and each participant of such an agreement is registered with the relevant authorities, then each participant of the agreement independently fulfills the duties of a taxpayer.

In this case, an individual entrepreneur, who is a single tax payer and participates in a joint contract, must take into account the income received from carrying out activities in accordance with the contract on joint activities, together with the profit from his own economic activity.