An individual entrepreneur sells vegetables and fruits under the general taxation system. These are short-term storage goods that often spoil, and therefore the costs of their spoilage must be correctly reflected in the accounting. How to do it correctly read below.
Procedure for writing off spoiled goods
The procedure for taxation of the income of natural persons – entrepreneurs is determined by Article 177 of the Tax Code of Ukraine (hereinafter – the Tax Code). According to item 177.2 of the Tax Code, the subject 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 the individual entrepreneur.
Point 177.4.4 of the Tax Code defines the list of expenses directly related to the receipt of income by the individual entrepreneur from the conduct of business activities on the general taxation system, which does not include expenses incurred as a result of normal loss.
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 carried out in paper and/or electronic form, including 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, according to which accounting of income and expenses is carried out by individual entrepreneurs and natural persons who conduct independent professional activity, and the Procedure for its conduct (hereinafter – Procedure No. 261) were approved by Order of the Ministry of Finance No. 261 of May 13, 2021.
According to item 1 of Chapter II of Order No. 261, self-employed persons enter the information on the standard form, according to which accounting of income and expenses is carried out, in the following order, in particular:
- column 2 shows the amount of income received from business or independent professional activity, in particular, funds received in the current account, in the cash register of the taxpayer and/or received in cash, the amount of debt for which the statute of limitations has expired, the value of free received goods (works, services);
- information on documented expenses related to business activity or independent professional activity is indicated in columns 5 – 10, respectively.
Taking into account the above, the current rules of the Tax Code and Order No. 261 do not provide for the inclusion in the composition of expenses of the natural person – entrepreneur on the general taxation system of expenses that arose as a result of normal loss, that is, spoilage of vegetables and fruits.
