In 2017, a mandatory payment of SDRs was introduced in the minimum amount. The tax was imposed even on those sole proprietors who did not receive any profit. At the time, the law provoked a barrage of criticism, as it was not news to anyone that many sole proprietors or self-employed persons with independent professional activities (hereinafter – NAPs) had irregular activities.
Then they were faced with a choice: to close the sole proprietorship completely, to pay the minimum SDR and incur losses during the “hibernation” period or not to pay the tax pending the cancellation of the claim, gradually increasing the debt.
Discussions on the abolition of the tax have been going on for a long time and later grew into Bill №592, which aims to eliminate discrimination against individual single contributors.
The law enters into force in two stages. The first – from 3 June 2020. The norms of this stage provide for the write-off of arrears accrued to SDR payers, as well as fines and penalties accrued on such amounts. The second stage will begin on 1 January 2020. Then the amendments to the Law on SSC will come into force to narrow the circle of single contribution payers.
We will dwell on the first stage in more detail, as the deadline for submitting applications for debt write-off expires on August 31, 2020.
Despite the fact that Law came into force on 3 June 2020, the real opportunity to submit relevant applications appeared only on 10 August 2020, when another Bill №786, adopted in the previous month, came into force. The relevant law regulates a number of problems with legal inconsistencies that arose in June.
When applying by August 31, debt write-off for non-working sole proprietors is carried out if:
But the tax has grounds for refusing to write off debts in the following cases:
Private individual: submit an application for state registration of termination of business activity to the state registrar at the location of the registration file of a natural person – entrepreneur and to the tax authority – reporting (for the period from 1 January 2017 to the date of entry into force of Law № 592-IX) reporting has not been submitted before.
Self-employed persons engaged in independent professional activity: submit to the tax authority at the main place of registration an application for deregistration as a single contribution payer and reporting (for the period from January 1, 2017 to the date of entry into force of Law № 592-IX) if reporting has not been submitted before.
Also for individuals engaged in independent professional activity it is necessary to register the termination of independent professional activity (or suspension or change of organizational form of the relevant activity from independent (individual) to another) and submit to the supervisory authority an application for liquidation of the taxpayer (form 8- OPP). Confirmation of the termination of independent professional activity is the information (extract) of the relevant register, which includes information on the state registration of such activity.
Therefore, we advise you not to delay and in case of fulfillment of mentioned above conditions, to submit a corresponding application to the Tax Office. After receiving information from the state registrar (regarding FOPs) or application for deregistration as a single contribution payer (from the person conducting the NAP) and provided that the payer submits reports on SRS, the tax service is given 15 working days to conduct an in-house inspection. Based on its results, a decision will be made to write off the amount of arrears, penalties and fines.