Business always follows the basic economic principle being that of maximizing revenue and minimizing expenses. Governments are always interested in the development of business via the creation of new jobs, higher productivity, GDP as well as taxation implemented via special tax regimes widely used around the world. Ukraine offers a unique 4 tier system of taxation for small and medium-sized enterprises (SMEs) through which SMEs can minimize expenses and maximize its revenues.

The special taxation system, known as individual entrepreneurs' system or "FOP", consists of 4 groups and is regulated by §297.1 Article 297 of The Tax Code of Ukraine. Each group is focused on a different population category and has its own requirements. Entrepreneurs included in the FOP groups "1 through to 3" must pay the quarterly single tax instead of paying personal income tax. In some cases, the general taxation system may be much more effective rather than that of the 3rd group, since it deducts 18% from the revenue (not net income) and allows for expenditure deduction. Also, each group, including the "general" group, must pay the single social contribution for themselves and employees as well.

The "FOP" group Annual income is not higher than (UAH) Employees allowed Taxation Taxation Taxation
Single tax/
Income tax
Single social contribution Military collection
1st Group 1 002 000 0 227 UAH/month 1320 UAH/month
2nd Group 5 004 000 10
1200 UAH/month 1320 UAH/month
3rd Group 7 002 000 No limits 5% of net income or
3% if pays VAT
1320 UAH/month
4th Group No limits No limits * 1320 UAH/month
General system No limits No limits 18% 1320 UAH/month
(22% of the salary)

Overall, the FOP system grants an extensive list of benefits such as lower taxation, minimum paperwork, official rights, social insurance, less reporting requirements and more flexibility. It is very easy to set up and register employees without costly bureaucratic procedures. Alongside with the benefits, there are some requirements for each group.

The Ukrainian "FOP" system allows individual entrepreneurs to register themselves in less than a week and enter the market under fair and transparent conditions.

For further information on how you or your business can benefit from the FOP system, please contact our Kyiv Tax and Legal Department at

Eurofast is a regional business advisory organisation employing local advisors in over 23 cities in South-East Europe & Middle East (SEEME). The Organisation is uniquely positioned as one-stop-shop for investors and companies looking for professional services in South-East Europe & Middle East.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.