In case of control and verification measures the question often raises of the need for business entities to reflect in the tax calculation of the amounts of income accrued (paid) in favor of taxpayers, and the amounts of tax withheld from them in form No. 1 DF (hereinafter – tax calculation in form No. 1 DF) payments of income in favor of sole proprietors. Let's consider this question in more detail.
General rules
According to Art. 51 of the Tax Code of Ukraine (hereinafter – the Tax Code) the taxpayers, including tax agents, are obliged to submit to the controlling authority in terms, set by the Tax Code for the tax quarter, the tax calculation of the amounts of income, accrued (paid) in favor of taxpayers.
When accruing (paying) income to sole proprietors (hereinafter – SP) (regardless of the tax system) and self-employed tax agents are required to reflect such income in the tax calculation form No. 1DF for the reporting quarter in which they were accrued (item 176.2 Art. 176 of the Tax Code).
Filing form and procedure
Form of tax calculation No. 1DF and the procedure for its filling out were approved by Order of the Ministry of Finance of Ukraine No. 4 of January 13, 2015.
When filling out the tax calculation form No. 1DF:
- column 3a “Amount of accrued income” reflects the income (for the reporting quarter), which is accrued to the entrepreneur. In the case of accrual of income, its reflection in column 3a is mandatory regardless of whether such income is paid or not. Paid income is reflected in the tax calculation on form No. 1DF with a sign of income “157”;
- column 3 “Amount of paid income” shows the amount of actually paid income. For example, if the accrual of income was made in March (I quarter) and the payment was made in April (II quarter), the accrued amount will be reflected in column 3a “Amount of accrued income” for the I quarter, and the amount actually paid will be reflected in column 3 “Amount of paid income” of tax calculation according to the form No. 1DF for the II quarter;
- column 4a “Amount of accrued tax” reflects the amount of tax accrued and withheld from income accrued to the taxpayer in accordance with the law (if the entrepreneur has not provided a copy of the document confirming state registration in accordance with the law as a business entity);
- column 4 “Amount of the transferred tax” reflects the actual amount of the transferred tax to the budget (in case of tax accrual and reflection in column 4a).
If the SP has provided a copy of the document confirming state registration as a business entity, then columns 4a “Amount of accrued ta”" and 4 “Amount of transferred tax” are not filled in (zeros are placed in these columns).
At the same time, during the accrual (payment) of SP income from income from entrepreneurial activity, personal income tax is not withheld if SP provided a copy of a document confirming state registration as a business entity:
- for SP who is on the general system of taxation, such a document may be a copy of a statements or extract from the State Register;
- for an entrepreneur applying the simplified taxation system, – a copy of the certificate of payment of the single tax or a copy of a statement or extract from the State Register;
- for a person who carries out independent professional activity, – copies of the certificate of registration for tax purposes as a natural person who carries out independent professional activity.
Additional information
It should be noted that the accrued (paid) income to individuals, which is reflected in the tax calculation form No. 1DF, serve as information content of the State Register of individuals – taxpayers on the source of income, objects of taxation, the amount of accrued and/or received income, amounts of accrued and/or paid taxes.
The State Register of Individuals – Taxpayers is an automated data bank created to ensure a single state account of individuals who are required to pay taxes, fees, other mandatory payments to budgets and contributions to state trust funds in the manner and on the terms that are determined by legislative acts of Ukraine.
In accordance with item 70.1 Art. 70 of the Tax Code the State Tax Service of Ukraine forms and maintains this register.
