Ukrainian Businesses Risk Penalties for Adding Generator Fees to Receipts.

Power Outages and Their Impact on Small Businesses

According to Novyny.live: To cope with Ukraine's ongoing electricity shortages, many small business owners have started adding a surcharge for generator use to customer receipts. This practice, however, could lead to significant fines and force these businesses onto a more complex tax system. Entrepreneurs operating under the simplified tax regime risk penalties for conducting unregistered business activities or for using prohibited economic activity codes (KVED).

While Article 15 of the Law 'On Consumer Rights Protection' permits businesses to add supplementary charges under certain conditions, a critical restriction exists. Those on the simplified 'single tax' are explicitly prohibited from selling electricity. Violating this rule can trigger financial penalties and a mandatory transfer to the general taxation system, which involves more stringent accounting and reporting requirements.

Economic Activity Codes and Their Consequences

The simplified tax codes available to individual entrepreneurs (FOPs) include:

• 35.11 (Electricity Generation)
• 77.39 (Renting Out Other Machinery, Equipment, and Goods)

By 2026, the single tax rate for FOPs in groups 1 and 2 will be calculated based on the minimum wage and subsistence level. This upcoming change could further strain entrepreneurs already grappling with the rising costs of securing their own power supply. The country's energy grid has suffered severe damage, forcing widespread reliance on private generators for basic operations.

Therefore, Ukrainian entrepreneurs must exercise caution when adding generator fees to receipts, as this can lead to legal repercussions that severely disrupt their operations. Amidst the instability of the power supply, strict adherence to legislative requirements is essential to avoid fines and an unwanted shift to the general tax regime.

Faced with immense challenges to the national energy infrastructure, business owners are compelled to find ways to sustain their activities. However, introducing these surcharges can create additional administrative hurdles and risks for those on the simplified tax system. A clear understanding of legal norms will be a crucial factor for business survival during this period of uncertainty.