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Sole proprietors’ lot in Ukraine is providing services, production does not come easy for them

In 2020, 8.2% of all added value created in Ukraine (measured in terms of production costs) accounted for sole proprietors. In 2013, this figure was 5.9%. In 2020, 97.5% of the sole proprietors’ value added was accounted for by small businesses and only 2.5%—for medium-sized ones.

In monetary terms, the contribution of the sole proprietors is 61.3 billion UAH and 257.6 billion UAH, respectively. Such data are provided by the State Statistics Service.

Cost-of-production value added is gross income from operating activity adjusted for subsidies and indirect taxes. The summation of the gross value added of all economic sectors forms the totalling GDP at the production level.

According to Danylo Hetmantsev, the Head of the Rada’s Committee on Finance, as of December 1, 2021, there were 1,994,000 active sole proprietors in Ukraine. Their number is growing for the third year in a row.

At the end of 2014, there were 2.67 million sole proprietors in Ukraine—this was the maximum. Since then, their number has been decreasing annually to a minimum of 1.17 million in 2018.

In the first half of 2021, the number of sole proprietors increased by almost 32,000: 44,000 new entrepreneurs started their activities, and 12,000 closed.

The number of sole proprietors increased in the following types of activities the most:

  • computer programming, consulting—by 15,759 (40.9%);
  • retail trade—10,155 (26.3%);
  • activities related to catering and drinks—3,658 (9.5%);
  • providing information services—3,284 (8.5%);
  • providing other individual services—1,873 (4.9%).

Most of the sole proprietors closed in the following types of activities:

  • wholesale trade—3,449 (32.9%);
  • storage facilities—2,878 (27.4%);
  • providing social assistance without providing housing—946 (9.0%);
  • radio and television broadcasting—769 (7.3%);
  • air transport—622 (5.9%);
  • land and pipeline transport—581 (5.5%).

Note that the register of single tax payers is maintained by the State Tax Service. The information in it is updated daily. It is an open registry.

According to the State Statistics Service, as of January 1, 2021, 1.35 million different legal entities were registered in Ukraine (in 2014, there were 1.32 million).

Most of the sole proprietors closed in the following types of activities:

  • wholesale trade—3,449 (32.9%);
  • storage facilities—2,878 (27.4%);
  • providing social assistance without providing housing—946 (9.0%);
  • radio and television broadcasting—769 (7.3%);
  • air transport—622 (5.9%);
  • land and pipeline transport—581 (5.5%).

Note that the register of single tax payers is maintained by the State Tax Service. The information in it is updated daily. It is an open registry.

According to the State Statistics Service, as of January 1, 2021, 1.35 million different legal entities were registered in Ukraine (in 2014, there were 1.32 million).

Contribution of sole proprietors to economy in specific industries and activities

In 2013, the contribution of all sole proprietors to the Ukrainian economy (to the volume of manufactured products) was 4.8%. In 2020, it increased to 10.8%. At the same time, the share of entrepreneurs in different industries quite naturally differs significantly: from zero (mining industry and electricity supply) to 80.1% (providing other types of services).

There is no unity even within large groups of activities. For example, in 2020, the share of sole proprietors as a whole in industry was 2.1%, and in textile production—64.1%.

The other examples of overshoot are the following:

  • in construction—demolition of buildings (28.8% in 2020) and preparatory work (23.0%);
  • in trade—retail sale of bakery products (72.5%) and sales from the stalls and in the markets (99.0%);
  • in information and telecommunications—web portals (62.3%);
  • in education—preschool education (43.4%);
  • in healthcare—residential care (33.1%);
  • in sports services—fitness centers (79.3%);
  • in other services—shoe repair (98.4%).

Note that in most types of activities, the share of sole proprietors is growing over time. But there are also exceptions. For example:

  • in dentistry, their share in 2020 compared to 2013 fell to 54.3% from 59.5%;
  • in retail sales of drinks—up to 40.5% from 66.7%;
  • in taxi services—up to 79.3% from 85.1%;
  • in publishing of computer games—up to 67.2% from 70.1%.
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Sole proprietors’ contribution to tax revenues

As of September 13, all sole proprietors contributed 52.6 billion UAH in taxes to the budgets.

The tax debt of the sole proprietors as of October 20 amounted to 7.2 billion UAH.

On October 28, there were 58 billion UAH on the sole proprietors’ accounts.

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