Tax rates and thresholds are given for 2026. The legal provisions were verified as of September 25, 2026. The conclusions depend on the structure of the company's income, expenses and transactions and must be verified before use.
A company providing legal and consulting services in Ukraine approached UHY Prostir for accounting services and a comparison of tax systems. It needed an assessment of the general system, group 3 of Ukraine's simplified single tax system without value-added tax (VAT), and the effect of VAT on the business's finances.
Data for the comparison
For the comparison, we analyzed:
- the types of services and contract terms;
- the revenue forecast and growth scenarios;
- the costs of the team, contractors and administration;
- the client base and the clients' tax status;
- the company's ownership structure;
- the cost of accounting services.
The goal was to compare taxes and related costs on the same input data.
Comparing the general and simplified systems
For an ordinary legal entity under the general system, the standard corporate income tax rate is 18%. The base is the financial result with tax adjustments, where applicable. State Tax Service of Ukraine: corporate income tax rates (in Ukrainian).
For group 3 without VAT, the compared payments are 5% single tax + 1% military levy, 6% of revenue in total, with revenue determined under the rules of the simplified system. Single tax rates (in Ukrainian), military levy (in Ukrainian).
| Indicator | General system | Group 3 without VAT |
|---|---|---|
| Basic calculation | Taxable profit × 18% | Revenue × 5% + revenue × 1% |
| Effect of expenses | Taken into account through the financial result and tax adjustments | Don't reduce the base for the single tax and the military levy |
| What else is assessed | VAT, cost of accounting, other payments | Revenue cap, restrictions of the simplified system, other payments |
As a rough guide, you can compare 18% of profit with 6% of revenue. With the same revenue in both scenarios, these amounts are equal when taxable profit is one-third of revenue:
6% ÷ 18% = 33⅓%.
With a higher profit share, the simplified system results in a lower amount of these specific taxes; with a lower share, the general system does. This is a simplified guide that leaves out VAT, differences in accounting costs and other factors. It isn't a ready-made recommendation.
The client's decision
Based on the model we prepared, the client decided to switch to the simplified system without VAT.
The percentage of savings must be confirmed by the underlying calculation for a specific period. It must take into account the military levy, a comparable set of payments and the cost of accounting services. One company's result can't be automatically transferred to another business.
What to check before switching
Eligibility for the simplified system. The actual types of activity, transactions, forms of settlement and other restrictions of the Tax Code of Ukraine are checked.
Ownership structure. In particular, an obstacle is a combined stake of 25% or more held by legal entities that aren't single tax payers. Guidance of the State Tax Service (in Ukrainian).
Revenue cap. In 2026, the cap for group 3 is 10,091,049 Ukrainian hryvnias (UAH). Both current revenue and growth prospects must be considered. Conditions for legal entities — State Tax Service (in Ukrainian).
Transition transactions. Advances, receivables, ongoing contracts and the consequences of a change in VAT status should be checked separately.
Accounting readiness. Switching doesn't remove the need for bookkeeping, source documents, reporting and monitoring incoming payments.
Assessing the effect of VAT
First determine whether there's a registration obligation, and then the economic consequences.
Under the general system, exceeding UAH 1 million of qualifying supply transactions over the last 12 calendar months may trigger mandatory VAT registration. Single tax payers in groups 1–3 are exempt from this rule. Guidance of the State Tax Service (in Ukrainian).
For legal and consulting services, the place of supply matters, and it's determined by the recipient. Transactions with Ukrainian and foreign clients must therefore be analyzed separately. State Tax Service: place of supply of services (in Ukrainian).
The financial model takes into account:
- whether VAT can be added to the price under the contract;
- whether clients need input VAT;
- what input VAT is available to the company itself;
- how much VAT administration costs;
- what consequences a change in status will have for existing contracts.
Having VAT-registered clients doesn't by itself prove that registration is beneficial. Likewise, having mainly individual clients doesn't cancel a legal obligation if it has arisen.
