The entrepreneur does not have to pay SSC in the absence of his income. Reality or dream?

Rather frequent changes in the tax law is creating serious difficulties for small businesses. Fairly common and not unfounded thought. Another problem is the regulation of economic activity is not direct applicable laws and regulations. Well, this has become a familiar state of "climate" in which a Ukrainian business. And even more unexpected was the decision of Kirovohrad regional administrative court which in its decision of 23 may of this year declared illegal and abolished the requirement of the State fiscal service /SFS/ in Kirovohrad region on payment of the single social contribution /SSC/ for obligatory state social insurance of physical persons–entrepreneurs, did not carry out business activity and have no revenue. We won't focus our attention on conspiracy speculation as to whether it could not happen in the period of devolution. Let's talk in fact.

The plaintiff appealed to the court with a statement from the office of fiscal service about recognition illegal and cancellation of the request for payment of the debt by the SSC. In his statement, the entrepreneur indicated that since 1997 has not carried out business activities and filed an application to the territorial division of the SFS on its termination. Since that time, reporting to the tax not provided and worked as an employee paying the appropriate taxes. Additionally, the plaintiff noted that the management of the SFS, whereby the requirement to pay social contribution, not audited and that the tax on late filed request. Objections of the tax was based on the fact that regardless of income the plaintiff when the debt and he must pay the SSC in the minimum amount specified by law. Also, it was noted that the calculation of the social contribution made not only on the basis of inspection reports and other documents.

The court found that citizen was registered as natural person-entrepreneur 14 April 1997 and was on the simplified system of taxation. Since 1997 has not filed accounts nor the tax or other regulatory authorities. November 9, 2018, the Management of SFS took the plaintiff on payment of social contribution. 13 December 2018 was held on the state registration of termination of business activities of the plaintiff. Monetary obligation accrued for the period from 01 January 2017 to 30 September 2018. During the 2017 - 2018 citizen worked and received wages in regional branch "Odesa railway JSC "Ukrainian Railways"" and the company, respectively, was paid to SSC from his wages. According to territorial divisions SFS at the place of residence of the plaintiff in the period from 1997 to 2018 has submitted an application on termination of its business activities. Managing SFS said that the inspection report before generating requirements was not, and the payment calculated based on the integrated card of the payer and the extract from the Unified state register of legal entities, individuals-entrepreneurs and community groups.

The disputed legal relationship is regulated exclusively by the provisions, which are based on the Law of Ukraine "On collection and accounting of single contribution for obligatory state social insurance". Regulations according to the Law established that the only contribution is calculated for taxpayers specified in paragraphs 4 (except physical persons-entrepreneurs who have chosen simplified taxation system), 5 and 5-1 of article 4 of this Law, - the amount of income (profit) received from their activity, subject to tax on the income. the amount of the single fee cannot be less the minimum insurance payment for a month.

If such payer has not obtained the income (profit) during the quarter or specific month of the reporting quarter, the payer is obliged to determine the base amount, but not more than the maximum value of the base charging a single fee, established by this Law. The amount of the single fee cannot be less the minimum premium. Therefore, these taxpayers have an obligation to pay a fee in the amount established by the law, regardless of income (profit). The list of these taxpayers do not include physical persons-entrepreneurs who have chosen simplified taxation system.

Paragraph 3 of part 1 of article 7 of the Law stipulates that the only contribution is charged for the payers specified in paragraph 4 of part one of article 4 of this Law, who have chosen simplified taxation system, in the amount determined by such taxpayers for themselves, but not greater than the maximum value of the base charging a single fee, established by this Law. The amount of the single fee cannot be less the minimum premium.

Consequently, individuals-entrepreneurs who have chosen simplified tax system and does not receive income (carries on business), there is no obligation to pay the contribution in a minimum amount. The court found that the period for which assessed contribution from entrepreneurial activities, the plaintiff was not engaged in the activity because he was in an employment relationship with the company, which was paying contribution to his wages. Control SFS has not provided evidence that would refute this fact. Such evidence could be obtained during the inspection. Moreover, 13 December 2018 the state registration of termination of entrepreneurial activity.

The requirements of parts 2 and 3 of article 9 of the Law stipulates that the calculation of the single contribution made on the basis of accounting and other documents according to which charge or which confirm the accrual of payments (income), which according to this Law are charged a single fee. Calculus of a single fee by the authorities of revenues and duties in the cases stipulated by this Law, on the basis of acts of checks of correctness of calculation and payment of single contribution, reporting to payers in the bodies of income and fees, accounting and other documents confirming the payments (income), amounts which under this Act is charged a single fee.

Consequently, the tax authority was entitled to charge a fee, and accepted the requirement about its payment, on the basis of: the act of checking; reporting that is submitted by the payer to the authority of revenues and duties, accounting and other documents confirming the payments (income), the amount of which (whom) in accordance with the Law charged the fee. After analyzing the explanations of the defendant, the court concluded that the absence of these grounds. Thus, the plaintiff had not filed accounts, Management of SFS or other public authority has not verified the plaintiff, the defendant was not provided the accounting and other documents. It should also be noted that the information from the integrated form of the payer of the fee and with Registry are not included in the list of "other documents," because it does not confirm the payments (income). Such data are the basis for the audit entity.

Thus, the court concluded that the wrongfulness of the requirements of the  General Directorate of State fiscal service Kirovohrad region of payment of the single social contribution.
So, to summarize dry legal language, the court explained its decision in two circumstances:

1) the lack of a natural person–entrepreneur, which chose simplified taxation system, the obligation to pay the single social contribution in the absence of income;
2) absence of the tax authorities the grounds for the accrual of arrears SSC without inspection of the entrepreneur.

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