A system-wide entrepreneur subscribes to professional publications for consultants, who provide services to clients taking into account current changes in legislation. Read below whether to include the costs of purchasing professional literature in his expenses.
Taxation rules for sole proprietors-general system employees
Income of individual entrepreneurs under the general taxation system is determined and taxed in accordance with the provisions of Article 177 of the Tax Code of Ukraine (hereinafter - the Tax Code). The object of taxation is net taxable income, i.e. the difference between income received and documented expenses that are directly related to the entrepreneur's business activities.
The list of expenses that can be taken into account when determining such income is given in item 177.4 of the Tax Code. In particular, item 177.4.4 of the Tax Code allows including in expenses the cost of communication services, advertising and other services necessary for conducting business activities.
At the same time, the legislation provides a clear requirement: income and expenses are recognized exclusively on the basis of primary documents. That is why it is important for an individual entrepreneur not only to actually incur expenses, but also to properly document them.
Accounting nuances
An individual entrepreneur on the general taxation system is obliged to keep records of income and expenses and have documents confirming the origin of goods and the fact of expenses. Such records can be kept both in paper and electronic form, in particular through the taxpayer's electronic account.
A standard form approved by Order of the Ministry of Finance of Ukraine No. 261 of May 13, 2021 is used for accounting. If an entrepreneur carries out activities in the agricultural sector, accounting for agricultural products is kept separately from other types of activities.
Practice shows that it is errors in the preparation of primary documents or the lack of confirmation of the connection of expenses with economic activities that most often cause claims from regulatory authorities.
When the cost of the Internet and professional publications can be included in expenses
Modern business activity is impossible without access to the Internet, professional information and specialized sources. That is why the costs of Internet services, subscriptions to specialized publications and the purchase of professional literature can be included in the expenses of an individual entrepreneur in the general taxation system.
The key condition is that such expenses must be directly related to the receipt of income from business activities. For example, if specialized publications or professional literature are used to provide consulting, accounting, legal or other professional services, the costs of their purchase may be considered reasonable.
No less important is the availability of properly executed primary documents. Confirmation can be payment instructions, bank or payment statements with details of counterparties and payment amounts, cashier's checks, contracts, invoices and other documents confirming the fact of payment and receipt of the relevant services or goods.
How to minimize tax risks
To avoid disputes with regulatory authorities, entrepreneurs should pay special attention to systematizing documents and justifying the economic necessity of expenses. If expenses are directly related to the activities of the individual entrepreneur and are confirmed by primary documents, they can be legally included in expenses when determining net taxable income.
