A natural person – entrepreneur on the general taxation system has purchased professional literature to increase the level of knowledge and ordered marketing services via the Internet. Should he include the cost of purchased specialized literature and Internet services in his expenses? Read below.
Brief instructions
Expenses for services received via the Internet and the cost of purchased literature are included in the taxpayer’s expenses, provided that they are directly related to the receipt of income by the natural person – entrepreneur from business activity and in the presence of primary documents, namely: documents that record the fact of spending money on the purchase of such services, i.e. relevant payment documents (payment instructions, statements about the movement of funds in the taxpayer’s bank/non-bank payment service provider’s accounts with data of counterparties and the cost of goods (works, services), check, agreements, etc.).
Taxation of income received by the individual entrepreneur from conducting business activities, except for persons who have chosen a simplified taxation system, is regulated by Article 177 of the Tax Code of Ukraine (hereinafter – the Tax Code).
According to item 177.2 of the Tax Code, the object of taxation is the net taxable income, i.e. the difference between the total taxable income (revenue in monetary and non-monetary form) and documented expenses related to the business activity of such an individual entrepreneur.
The list of expenses directly related to the receipt of income of individual entrepreneurs, who conduct activities on the general taxation system, is determined by item 177.4 of the Tax Code, in particular, point 177.4.4 provides for other expenses for communication services and advertising.
Incomes and expenses, which are taken into account for determining the object of taxation, are recognized on the basis of primary documents confirming receipt by the taxpayer of income tax or expenses, the obligation to maintain and store them in accordance with Article 44 of the Tax Code.
According to item 177.10 of the Tax Code, individual entrepreneurs are obliged to keep records of income and expenses and to have supporting documents regarding the origin of the goods. Accounting of income and expenses can be done in paper and/or electronic form, in particular through an electronic cabinet.
The accounting of income and expenses from the production and sale of own agricultural products is kept separately from the accounting of income and expenses from the implementation of other types of business activity.
The standard form for recording income and expenses and the procedure for keeping such records are determined by the central executive body, which ensures the formation and implementation of state financial policy.
Order No. 261 of the Ministry of Finance of Ukraine of May 13, 2021 approved the Standard form for accounting of income and expenses by natural persons – entrepreneurs and natural persons engaged in independent professional activity and the Procedure for its conduct.
