Will the tax authorities start receiving reports from Etsy, Amazon, Shopify?

Rates and Limits. Group 3 of the single tax—most common for online trade—implies a 5% of income rate (assuming non-registration for VAT purposes). The tax is paid on total revenue without deducting expenses. Group 2 pays a fixed rate (approximately 1340-1600 UAH per month as of 2025) regardless of turnover, but with an annual income limit of about 6.7 million UAH. That is, Group 2 allows paying a fixed tax amount in advance, whereas Group 3 is a percentage of turnover.

‍Tax base: From the full amount paid by the buyer or the amount received by the entrepreneur? – It is crucial for sole proprietors to understand that the object of taxation is income received in cash during the period. That is, the tax is levied on the amount of funds the individual entrepreneur (FOP) actually received into their account or in cash. If a buyer paid $100 for a product, but the platform withheld a commission and taxes and transferred, say, $90 to the entrepreneur, then the taxable income is $90. The FOP does not include in income sums that did not come directly to them (e.g., VAT or other taxes that the platform independently deducted from the buyer and transferred abroad). Similarly, marketplace fees/commissions effectively reduce the amount received by the entrepreneur, so they pay the single tax on the net payout from the platform. From the DAC7 “reward” perspective, it refers exactly to the net amount after commissions or taxes withheld by the platform — which coincides with what the FOP actually receives.

‍Example: A buyer paid $120 on Etsy for a product, of which $20 is EU VAT, and $5 is Etsy commission. The seller (FOP) received $95 into their account. These $95 are subject to taxation as their income. The $20 VAT was not their income, and the $5 was paid as a platform service — but since a Group 3 FOP cannot deduct expenses, only the amount they actually received ($95) will go into income.

‍Returns of goods and funds. If a sale is canceled and the money refunded to the buyer, this turnover is not included in the FOP’s income. The Tax Code explicitly states that prepayments / advances refunded to the buyer due to product returns or contract termination are not considered income of the sole proprietor. Practically, this means that when a refund occurs, the entrepreneur can exclude this amount from taxable income. If the refund happened in the same quarter as the sale, the entrepreneur simply does not include this revenue in the declaration (or immediately subtracts it). If funds were received in one quarter and refunded in the next, the tax authority advises submitting a correction declaration for the period in which the income was originally reported. Although this introduces additional bureaucracy, it is important that the tax is ultimately paid only on the amounts remaining with the entrepreneur after all settlements with clients. Therefore, refunds to clients reduce the tax base (are not taxed).

‍Gross income or profit? Under simplified taxation system, expenses are not taken into account. The FOP Group 3 pays 5% precisely from revenue (gross income), not profit. This means that even if, from the aforementioned $95 received, the entrepreneur had expenses (cost of goods, delivery, advertising, etc.), they do not reduce the amount of the single tax. The single tax is a “turnover tax.” Similarly, an FOP of Group 2 pays a fixed amount regardless of expenses or margin. At the same time, simplified entrepreneurs are exempt from profit tax, VAT (at 5%), maintain minimal reporting, etc., which compensates for the absence of expense deduction in the tax calculation.

‍Taxation of small sums. Beginners on platforms often ask: “Do I have to pay taxes if I only sold one thing for a small amount?” Legally, yes, you do if this income is from entrepreneurial activity. In practice, a Group 3 FOP may not have any personal income tax or unified tax obligation if they had no income in the quarter (Group 3 pays only on actual received income). A Group 2 FOP pays their fixed fee even for months without sales (unless on leave). However, Draft Law No. 13232 introduces an incentive for very small individual sellers: if they have no more than 3 sales per year totaling up to €2000, they are allowed not to open a separate “entrepreneurial” bank account and can use their personal account — acting as non-entrepreneurs. But even in such cases, the tax rate will be 5% of the received income. The government thus provides an opportunity for occasional sellers to easily meet tax obligations (the platform acts as a tax agent and pays 5% on sales).

‍New 5% mode for individuals. In the context of the future, it’s worth mentioning that draft law proposes a separate preferential tax regime on income received through platforms for physical persons-residents who are not registered as FOP. Under certain conditions (a special account for this activity, no hired employees, not exceeding an annual income of about 6.7 million UAH, not trading excisable goods, etc.), such individuals will be able to pay only 5% personal income tax from platform revenues. The obligation to withhold this tax falls on the platform operator. Essentially, this is an alternative to registering as an FOP: since the platform will already provide information on incomes, the state suggests immediately withholding 5% — the same amount a single tax payer would pay. This regime aims to simplify voluntary tax compliance for non-entrepreneurial sellers and bring them out of the shadow economy. For already registered FOPs (Group 3, 5% rate), essentially nothing will change — they still pay the same 5%, but independently. However, if an FOP is a “self-employed individual,” this new regime does not apply (condition — “not self-employed”). Thus, entrepreneurs will remain under their current rules, while unregistered sellers will have a chance to easily legitimize their income with a minimal rate via the platform’s mechanism.

‍Military levy and ESV. Do not forget that individuals in Ukraine also pay 5% military levy on their income. FOP single taxpayers were previously exempt from the military levy, but from 2023 it was reinstated: for Group 3 — 1% of turnover (essentially, on top of the full 5%, totaling about 6.5%), for Groups 1-2 a fixed monthly payment (~800 UAH). Draft Law on 5% personal income tax probably does not cancel the military levy, so the total burden for the platform seller can be about 6.5%. The Single Social Contribution (ESV) is paid by all entrepreneurs obligatorily, regardless of the system (22% of the minimum wage per month). For an individual not registered as an FOP, income from sales is not a base for ESV, so the new 5% regime does not envisage paying social contributions (which is a plus, but note that such persons do not accrue pension rights during these periods).

‍Therefore, a Ukrainian entrepreneur (FOP or not) must pay tax from the first hryvnia/dollar earned. For simplified taxpayers — 5% (or fixed payment), calculated from the total amount received into their account for the product/service. Neither taxes paid abroad by the buyer nor service commissions increase the taxable income—they effectively reduce the amount reaching the entrepreneur. But expenses are not deducted from the base (for the single tax). The tax is paid on the total income for the period (quarter for Group 3 EUP), not on each transaction individually. Refunds to buyers are excluded from income, and tax on them is not paid (though previous declarations may need adjustments if the period is closed).