The State Tax Service of Ukraine has drawn attention to the fact that the systematic activities of an individual who conducts sales transactions of goods, including real estate, are subject to state registration. More about this below.
Legislative environment
Such a norm is provided by the Law of Ukraine “On State Registration of Legal Entities, Individual Entrepreneurs and Public Organizations” No. 755-IV of May 15, 2003 (hereinafter – Law No. 755).
Thus, the incomes received by the sole proprietor from carrying out business activity, are taxed according to norms of Art. 177 of the Tax Code of Ukraine (hereinafter – the Tax Code).
Business activity
Business activity is the activity of a person related to the production (manufacture) and/or sale of goods, works, services, aimed at obtaining income and carried out by such person independently and/or through own separate units, as well as through any another person acting in favor of the first person, in particular under the agreements of the commission, power of attorney and agency agreements (paragraph 14.1.36 item 14.1 Art. 14 of the Tax Code).
In accordance with Part 2 of Art. 3 of the Commercial Code of Ukraine (hereinafter – the Commercial Code) business activity carried out to achieve economic and social results and for profit is entrepreneurship, and entrepreneurship entities are entrepreneurs.
Article 42 of the Commercial Code of Ukraine stipulates that by its legal nature, entrepreneurship is an independent, proactive, systematic, at one’s own risk business activity carried out by entrepreneurship entities (entrepreneurs) in order to achieve economic and social results and profit.
Therefore, business activity can be considered a set of constantly or systematically carried out actions for the production of tangible and intangible goods, sales of goods, performance of works or provision of services for profit.
Analyzing the features inherent in business activity, we can conclude that the latter involves the systematic adoption of independent decisions on the implementation of transactions aimed at making a profit, accompanied by the assumption of risks associated with such activities.
State registration
According to Arc. 58 of the Commercial Code, a business entity is subject to state registration as a legal entity or a natural person – entrepreneur in the manner prescribed by law.
State registration of an individual who intends to become an entrepreneur is governed by Art. 18 of Law No. 755.
In accordance with Part 6 Art. 128of the Commercial Code, a citizen-entrepreneur is obliged to:
- in cases and in the manner prescribed by law to obtain a license to conduct certain types of business activities;
- notify the state registration authorities about the change of address specified in the registration documents, the subject of activity, other essential conditions of business activity, which must be reflected in the registration documents;
- adhere to the rights and legitimate interests of consumers, ensure the proper quality of goods (works, services) manufactured by them, adhere to the rules of mandatory product certification established by law;
- prevent unfair competition and other violations of antitrust and competition law;
- keep records of the results of their business activities in accordance with the requirements of the legislation;
- timely provide the bodies of revenues and fees with a declaration of property and income (tax return), other necessary information for the calculation of taxes and other mandatory payments; pay taxes and other obligatory payments in the manner and in the amounts established by law.
