On November 3, 2025, members of the Verkhovna Rada submitted the following bill for consideration by the Verkhovna Rada of Ukraine No. 14178, “Draft Law on Amendments to Article 298 of the Tax Code of Ukraine Regarding the Clarification of Grounds for Compulsory Revocation of a Single Taxpayer’s Registration,” for consideration by the Verkhovna Rada of Ukraine.

It aims to clarify the grounds for the compulsory revocation of a single-tax payer’s registration, as defined by the Tax Code of Ukraine.

The current version of Article 298 of the Tax Code of Ukraine stipulates that single-tax payers are required to switch to paying other taxes and fees specified in this Code if they have a tax debt exceeding 3,060.00 UAH over two consecutive quarters.

However, this provision does not specify whether the tax debt incurred by an individual entrepreneur must be directly related to the conduct of their business activities. As a result, tax authorities often interpret this provision broadly, including in an individual entrepreneur’s tax debt obligations that arose for the individual and are in no way related to their business activities.

In light of this, Bill No. 14178 proposes to clarify subparagraph 8 of paragraph 298.2.3. of paragraph 298.2 of Article 298 of the Tax Code of Ukraine, specifically stipulating that single-tax payers are required to switch to paying other taxes and fees specified in this Code, if they have a tax debt related to the conduct of business activities in an amount exceeding the sum specified in paragraph 3 of clause 59.Article 59(1) of this Code, on the first day of each month for two consecutive quarters—on the last day of the second of the two consecutive quarters.

The amendments proposed in Bill No. 14178 are an extremely timely legislative initiative aimed at eliminating gaps and legal uncertainty, since specifying the grounds for the compulsory revocation of a single-tax payer’s registration due to a sole proprietor’s tax debt arising exclusively from their business activities reduces the risk of abuse by tax authorities and lowers the likelihood of automatic revocation of single-tax payer status due to debts arising from non-business obligations.

Therefore, specifying the grounds for revoking a single-tax payer’s registration is of significant importance to hundreds of thousands of entrepreneurs, as it ensures greater fairness and predictability in tax relations.

Benefits of the proposed changes for individual entrepreneurs:

1. Protection against unjustified revocation of single-tax payer status

The most important consequence of clarifying subparagraph 8 of paragraph 298.2.3 of Article 298 of the Tax Code of Ukraine will be a clear definition of the grounds for forcing an entrepreneur to switch to the general taxation system. Tax debts arising from an individual’s personal life will no longer be used as a means of pressure to change their tax status.

2. Enhancing Legal Certainty and Protecting Entrepreneurial Activity

A clear distinction between the “debt of an individual entrepreneur” and the “debt of an individual” promotes legal certainty and transparency. Entrepreneurs are given clear rules of the game: only debt arising from business activities can affect their eligibility to operate under the simplified tax system.

3. Reducing administrative pressure on businesses

It is not uncommon for individual entrepreneurs to face situations where tax authorities use any existing debts as grounds for revoking their single-tax payer status. This creates an additional burden, the need for lengthy appeals against unlawful decisions by tax authorities, and a waste of time and money. The proposed changes directly minimize such risks.

4. Operational Stability and Financial Planning

Individual entrepreneurs are critically dependent on a simple tax system. Clarifying the grounds for revoking an individual entrepreneur’s status as a single-tax payer due to the existence of a tax debtarising exclusively from their business activities, ensures the stability of the tax regime and allows taxpayers to plan their activities without fear of losing their status due to personal tax obligations unrelated to their business.

5. Compliance with the Principles of Fair Taxation

The single tax is tied to the activities of an individual entrepreneur, and it follows logically that the grounds for its revocation must relate exclusively to business activities. The draft law restores logic and fairness in the application of this provision. 

Therefore, the proposed amendments to Article 298 of the Tax Code of Ukraine represent an important and timely step toward the legal protection of individual entrepreneurs who are single tax payers. The bill closes a loophole in the wording of the grounds for revoking single-tax payer status, clearly distinguishing between private and business tax obligations.

This will result in greater legal certainty, reduced administrative burden, and the creation of a more favorable environment for business development in Ukraine.