The Tax Code of Ukraine in simple terms: what an entrepreneur needs to know

This material is for informational purposes only. The tax group, VAT payer status, rates, and special taxation conditions should be checked together with an accountant for your specific business.

The Tax Code determines which taxes an entrepreneur pays, how to keep tax records, when to file tax returns, how long to retain documents, and how tax audits are conducted.

For a store, online store, or small retail chain, several practical issues are particularly important: income accounting, single tax limits, deadlines for returns and payments, product documents, VAT, excise tax, and audits.

Some rules are established by other laws. ECR and PECR are regulated by Law of Ukraine No. 265/95-VR. As of the date of this material, its current version on the Verkhovna Rada portal is dated 26.06.2026. The Unified Social Contribution is regulated by Law of Ukraine No. 2464-VI. Licenses for alcohol, tobacco, liquids for electronic cigarettes, and fuel are regulated by Law of Ukraine No. 3817-IX.

Key points in one minute

How to keep income records under the single tax system

What the law says

This rule applies to Sole Proprietorships in Groups 1 and 2, as well as Sole Proprietorships in Group 3 that are not VAT payers.

Clause 296.1 of the Tax Code of Ukraine allows records to be kept in any form. The main requirement is that income received must be recorded monthly. Records may be kept on paper or electronically.

A different rule applies to Group 3 Sole Proprietorships that are VAT payers. They keep records of income and expenses using the standard form and in accordance with the procedure established by the Ministry of Finance.

In simple terms, an entrepreneur must be able to clearly answer how much income was received in each month.

What to do

Each month, reconcile:

• sales;

• returns;

• cash payments;

• card payments;

• receipts to the bank account;

• other amounts that, under Article 292 of the Tax Code of Ukraine, are included in the income of a single tax payer.

This makes it easier to notice in time when you are approaching the annual limit.

Example

A Group 2 Sole Proprietorship sold goods worth UAH 420,000 in September. Customers returned some of the goods.

At the end of the month, the entrepreneur must determine the income for tax accounting purposes according to the rules of the Tax Code of Ukraine and enter it in the monthly records.

In Torgsoft

To reconcile sales, you can use the “Report by Departments for a Period” and the “Sales Report”. In the software, the “Revenue” indicator is calculated as the amount of sales including discounts minus the amount of returns.

This data helps monitor store turnover. Taxable income must be determined according to the rules of the Tax Code of Ukraine because the management indicator “Revenue” and taxable income may be calculated according to different rules.

Legal provision: Tax Code of Ukraine No. 2755-VI, Clause 296.1, Article 292.
Tax Code of Ukraine on the Verkhovna Rada portal

When to file a tax return and pay the single tax

What the law says

For Groups 1 and 2, the tax period is a calendar year. For Group 3, it is a calendar quarter. This is expressly stipulated by Clause 294.1 of the Tax Code of Ukraine.

Group 1 and 2 Sole Proprietorships file their tax returns within the deadline established for the annual reporting period. The return shows income received, advance payments, and information on the Unified Social Contribution.

Group 3 taxpayers file their tax returns within the deadlines established for the quarterly period. Group 3 Sole Proprietorships also provide information on the Unified Social Contribution in the tax return for the fourth quarter.

The Unified Social Contribution itself is regulated separately by Law of Ukraine No. 2464-VI. The Unified Social Contribution is not part of the taxation system under the Tax Code of Ukraine.

When to pay the single tax

Group 1 and 2 Sole Proprietorships pay the advance payment no later than the 20th day of the current month.

Group 3 taxpayers pay the single tax within 10 calendar days after the deadline for filing the quarterly tax return.

Penalty

For late filing of a tax return, Clause 120.1 of the Tax Code of Ukraine provides for a fine of UAH 340 for each violation.

If a fine for the same violation has already been imposed on the taxpayer during the year, the next fine is UAH 1,020.
For Group 1 and 2 Sole Proprietorships, failure to pay or incomplete payment of the advance single tax payment entails a fine of 50% of the selected single tax rate.

For other agreed tax liabilities, Clause 124.1 establishes a fine of 5% of the repaid debt amount for a delay of up to 30 calendar days and 10% for a longer delay.

Common mistake

The entrepreneur remembers the tax return deadline but does not monitor the separate payment deadline.

It is better to have two separate fields in the tax calendar: “file” and “pay”.

Legal provision: Tax Code of Ukraine, Clauses 294.1, 295.1, 295.3, 296.2, 296.3, 120.1, 122.1, 124.1.
Tax Code of Ukraine

Which limits and rates to monitor in 2026

The single tax income limit depends on the minimum wage established as of January 1 of the relevant year.

In 2026, the minimum wage is UAH 8,647. The subsistence minimum for an able-bodied person is UAH 3,328.

Groups 2 and 3 are most commonly relevant for retail businesses.

For Group 1, the law allows retail sale of goods from market stalls and certain household services to the public. Group 2 permits, among other things, the production and sale of goods, restaurant business, and services subject to the conditions of this group. For Group 3, the number of employees is not limited.
The maximum single tax rate for Group 2 is 20% of the minimum wage: 8647 × 20% = UAH 1,729.40 per month.

The specific fixed rate is established by the local council.

For Group 3, the rate is 3% of income when VAT is paid separately or 5% of income when VAT is included in the single tax.

If the limit is exceeded

For Group 1, 2, and 3 Sole Proprietorships, a single tax rate of 15% applies to the amount exceeding the limit. Further actions depend on the group and the amount of income.

Military levy

In 2026, the military levy for Group 1 and 2 Sole Proprietorships is 10% of the minimum wage per month: 8647 × 10% = UAH 864.70.

For Group 3 taxpayers, the rate is 1% of income determined under Article 292 of the Tax Code of Ukraine. These rates are established by Clause 16¹ of Subsection 10, Section XX of the Tax Code of Ukraine.

In Torgsoft

“Report by Departments for a Period”, “Sales Report”, “Comparative Report by Months”, and other reports allow you to monitor revenue for a selected period.

For a single tax payer, this is a convenient internal way to monitor how close the business is to the limit. Taxable income for the tax return is determined under Article 292 of the Tax Code of Ukraine.

Legal provision: Tax Code of Ukraine, Clauses 291.4, 293.2, 293.3, 293.4; Clause 16¹ of Subsection 10, Section XX.
Tax Code of Ukraine
Law of Ukraine No. 4695-IX on the State Budget of Ukraine for 2026

What documents are required for goods and transactions

What the law says

Article 44 of the Tax Code of Ukraine requires tax records to be maintained on the basis of primary documents, registers, financial statements, and other documents related to tax calculation.

There is a separate direct requirement for Sole Proprietorships under the general taxation system. Clause 177.10 requires them to keep records of income and expenses and have documents confirming the origin of goods.

In simple terms, if an entrepreneur purchases a batch of goods, they must retain documents explaining where those goods came from.

How long to retain documents

The Tax Code of Ukraine establishes different minimum retention periods.

For legal entities under the simplified taxation system, a significant portion of primary documents must be retained for at least 1,825 days.

For other documents that are not subject to longer periods, the minimum period is 1,095 days.

Certain categories of documents have a retention period of 2,555 days.
The period is calculated according to Clause 44.3.4. For example, for documents used as the basis for tax reporting, the calculation is linked to the date on which the relevant report was filed.

Penalty

For failure to retain documents for the prescribed period or failure to provide documents during tax control, Clause 121.1 provides for a fine of UAH 1,020.

A repeated violation within one year after such a fine has been imposed: UAH 2,040.

Example

A store received 30 coffee machines from a supplier. One year later, all the goods were sold.

The purchase documents are still required after the goods have been sold because their retention period has not yet expired.

In Torgsoft

To monitor the movement of goods, the software provides the “Incoming Invoice Register”, “Goods Movement”, “Warehouse Document Register”, and “Warehouse Document Log”.

The supplier card includes a “Documents” tab where documents related to the supplier can be entered.

A record in the software helps you quickly find a transaction. A legally significant primary document must be retained in a form that complies with legal requirements.

Legal provision: Tax Code of Ukraine, Article 44, Clause 177.10, Clause 121.1.
Tax Code of Ukraine

What Sole Proprietorships under the general taxation system should monitor separately

Clause 177.10 contains another practical requirement.

A Sole Proprietorship must keep records of income and expenses. The law expressly requires supporting documents confirming the origin of goods.

Separate accounting is required for retail fuel sales, as well as retail sales of alcohol or tobacco products if such sales are conducted at the address of the fuel retail location.

This provision does not establish a general requirement under Clause 177.10 for every alcohol or tobacco store to maintain such separate records. The wording of the Code specifically links this requirement to the address of the fuel retail location.

What to do

Maintain the link between the goods, the supplier, and the incoming document.

For a filling station or another fuel retail location where alcohol or tobacco is also sold, set up separate accounting for the relevant activity together with an accountant.

In Torgsoft

“Goods Receipt”, “Supplier”, “Incoming Invoice Register”, “Goods Movement”, and reports by product type help separate product transactions and track their history.

Legal provision: Tax Code of Ukraine, Clause 177.10.
Tax Code of Ukraine

How to monitor VAT tax invoices

This section applies to businesses registered as VAT payers.

Clause 201.10 requires the seller to issue a tax invoice and register it in the Unified Register of Tax Invoices within the prescribed deadline.

As of 17.09.2026, the temporary deadlines under Clause 89 of Subsection 2, Section XX of the Tax Code of Ukraine apply. They remain applicable during martial law and for six months after the month in which it is terminated or cancelled.

For tax invoices and adjustment calculations issued from the 1st through the 15th day of the month inclusive, the deadline is the 5th day of the following month inclusive.

For tax invoices and adjustment calculations issued from the 16th day through the last day of the month inclusive, the deadline is the 18th day of the following month inclusive.

Penalty

For violation of these specific temporary deadlines, Clause 90 provides for:

• up to 15 calendar days late: 2% of the VAT amount in the tax invoice or adjustment calculation;

• 16 to 30 days late: 5%;

• 31 to 60 days late: 10%;

• 61 to 365 days late: 15%;

• 366 days or more: 25%.

In Torgsoft

The software provides “Document → Tax Invoice Accounting” and “Tax Invoice Register and Export”.

The software helps prepare and organize data. Registration of the document in the Unified Register of Tax Invoices and compliance with the deadline must be monitored separately.

Legal provision: Tax Code of Ukraine, Clause 201.10; Clauses 89 and 90 of Subsection 2, Section XX.
Tax Code of Ukraine

What to consider when selling excisable goods

The sale of alcohol, tobacco, liquids for electronic cigarettes, and fuel is subject to separate rules.

The Tax Code regulates excise tax. Licensing of these activities is regulated by Law of Ukraine No. 3817-IX.

Therefore, before starting sales, you should separately check:

• whether the business is a payer of the relevant type of excise tax;

• whether a license is required;

• how the goods must be marked;

• what reports must be filed;

• what data must be included in settlement documents.

For alcohol, tobacco products, and liquids for electronic cigarettes, the Tax Code of Ukraine contains rules on excise stamp marking.

In Torgsoft

The additional “Excise Tax Return” feature allows you to view excisable goods sold during a selected period and export the report in XML format.

For goods with excise stamps, under “Sales → Additional Actions → Excise Stamps (Alt+L)”, you can work with stamp codes. There is also a “Check Excise Stamp Uniqueness” setting.

When selling goods configured to work with excise stamps, the software may require scanning the stamp barcode for each unit of goods.

The specific liability depends on the type of goods and the provision that has been violated. There is no single excise tax fine applicable to all situations.

Legal provision: Tax Code of Ukraine, Section VI; Law of Ukraine No. 3817-IX.
Tax Code of Ukraine
Law of Ukraine No. 3817-IX

How to prepare a store for an on-site audit

An on-site audit concerns the operation of a retail outlet directly at its location.

Clause 80.1 of the Tax Code of Ukraine allows such an audit to be conducted without prior notice. There must be a lawful basis and an order from the supervisory authority to begin the audit.

Before the audit begins, officials must present the documents required by Article 81:

• an audit referral;

• a copy of the order;

• official identification documents of the persons specified in the referral.
  If the mandatory documents are not presented or are issued in violation of the requirements of Clause 81.1, the Code provides grounds for refusing access to the audit. Refusal on other grounds is not permitted under this clause.

The tax authority is also entitled to conduct a test settlement transaction before beginning an audit of compliance with settlement rules and the use of ECR or PECR.

Example

Two inspectors arrive at a store.

The responsible employee checks the referral, order, and official identification documents, records their details, and informs the manager.

It is useful for a store to have a simple internal instruction describing these actions so that the salesperson does not have to resolve procedural issues independently.

In Torgsoft

In “Software ECR Analytics”, you can view fiscal receipts, filter them by period, accounting center, and document type, see the receipt creation mode, and view information about its transmission to the tax authority’s server.

This helps check the status of fiscal transactions before there is a need to reconstruct the sales history.

Detailed rules for the use of ECR and PECR should be checked under Law No. 265/95-VR. As of 17.09.2026, its current version is dated 26.06.2026.

Legal provision: Tax Code of Ukraine, Articles 20, 80, 81.
Tax Code of Ukraine
Law on ECR No. 265/95-VR

What to check in your business

• Reconcile income for each month.

• Monitor accumulated income from the beginning of the year.

• Check whether your activities comply with the conditions of your single tax group.

• Record separate dates for filing tax returns and paying taxes.

• Monitor payment of the military levy.

• Account for the Unified Social Contribution in accordance with Law No. 2464-VI.

• Retain invoices and other primary documents for the prescribed period.

• Check documents confirming the origin of goods if this requirement applies to your business.

• Monitor the registration of tax invoices and adjustment calculations if the business is a VAT payer.

• Check PECR fiscal receipts and their status.

• Separate the accounting of excisable goods according to the rules applicable to your type of activity.

• Prepare a brief instruction for employees in case of an on-site audit.

Common mistakes

1. Remembering about income accounting only before filing a tax return.

2. Monitoring the single tax limit only at the end of the year.

3. Treating revenue from a management report as the final amount for the tax return without reconciling it with Article 292 of the Tax Code of Ukraine.

4. Deleting documents for goods after they have been sold.

5. Confusing the tax return filing deadline with the tax payment deadline.

6. Forgetting about the military levy and the Unified Social Contribution when planning tax payments.

7. Issuing a tax invoice without checking whether it has been registered on time in the Unified Register of Tax Invoices.

8. Applying the same accounting rules to ordinary goods and excisable products.

Frequently asked questions

Does a Group 2 Sole Proprietorship need to keep income records?

Yes. Clause 296.1 requires income received to be recorded monthly.

Does a Group 2 Sole Proprietorship need to file a tax return quarterly?

As a general rule, no. For Groups 1 and 2, the tax period is a calendar year. In certain situations, the Code provides special rules.

How often does Group 3 report?

The tax period for Group 3 is a calendar quarter.

Does the Unified Social Contribution need to be reported in the tax return?

For Group 1 and 2 Sole Proprietorships, information on the Unified Social Contribution is included in the annual tax return. Group 3 Sole Proprietorships provide the relevant information as part of the tax return for the fourth quarter. The rules governing the Unified Social Contribution itself are established by Law No. 2464-VI.

Are documents confirming the origin of goods required?

Clause 177.10 expressly requires such documents from Sole Proprietorships to which this article applies, namely Sole Proprietorships under the general taxation system. Other requirements concerning documents for goods may arise from the Tax Code of Ukraine, inventory accounting rules, and special legislation.

How long should primary documents be retained?

The period depends on the type of taxpayer and document. The Tax Code of Ukraine provides minimum periods of 1,095, 1,825, or 2,555 days for different categories.

Can the tax authority visit a store without prior notice?

An on-site audit under Article 80 of the Tax Code of Ukraine is conducted without prior notice.

Does the Tax Code regulate all PECR rules?

No. The main rules governing the use of ECR and PECR are established by Law of Ukraine No. 265/95-VR.

What will change

The official Verkhovna Rada portal has already published the next version of the Tax Code dated 01.11.2026. Laws No. 3173-IX, No. 4115-IX, and No. 4536-IX are listed as the grounds for this version.

This article describes the rules as of 17.09.2026. The provisions of the future version are not applied here as currently effective rules.

The material should be reviewed again before November 1, 2026.

Sources

Tax Code of Ukraine dated 02.12.2010 No. 2755-VI. Key provisions for this article: Articles 20, 44, 80, 81, 120, 121, 122, 124, 177, 201, 291, 292, 293, 294, 295, 296; Subsections 2 and 10 of Section XX.
Official text of the Tax Code

Law of Ukraine “On the State Budget of Ukraine for 2026” No. 4695-IX. Articles 7 and 8.
Official text

Law of Ukraine “On the Use of Registrars of Settlement Transactions…” No. 265/95-VR.
Official text

Law of Ukraine “On the Collection and Accounting of the Unified Contribution…” No. 2464-VI.
Official text

Law of Ukraine No. 3817-IX on state regulation of the production and circulation of alcohol, tobacco, liquids for electronic cigarettes, and fuel.
Official text