You have a business, but no profit. Unfortunately, this happens quite often. Seasonal decline, reconstruction, waiting for payment from contractors, or even temporary suspension of activities — there are many reasons for unprofitability during a certain period. This raises a logical question: "If my business or organisation has no profit and I have nothing to declare, do I need to file a tax return at all?" So let's take a look at when a tax return is required, what to include in it if there was no income, and how to avoid penalties.
Who must file a tax return even if there is no profit
The Tax Code does not refer to profit, but to indicators that are subject to declaration. That is, you must file a tax return not because you earned money, but because:
- there were some business transactions in the reporting period, even without profit (expenses, accruals, free transfers, etc.);
- you are still a registered taxpayer and therefore formally report, even if you are not actually conducting any activities.
So let’s figure out who exactly is required to file a declaration.
1. Legal entities subject to income tax
All legal entities that are income tax payers are required to file a return for each reporting period, even if there is no profit. The tax return reflects not only profit, but also other indicators of financial activity – expenses, depreciation, exchange rate differences, etc. For example, a limited liability company has a loss of UAH 50,000 due to exchange rate differences. There is no profit, but a declaration must be submitted — it will show a negative value.
Even in the absence of transactions, companies must submit a zero return to confirm that the reporting period passed without any movement of funds or financial results. If there was no income, no expenses, no movement of funds, and no contracts, confirmation must be provided:
- zero movement in accounts,
- no transactions in the accounting records,
- an explanation of the actual inactivity.
However, you need to be very careful and, if necessary, consult with accountants. CeDePe will help you determine whether your situation really falls under the exception. It will also help you prepare an official justification to avoid claims from the State Tax Service.
2. Individual entrepreneurs on the simplified system (single tax)
Sole proprietors submit a single tax payer declaration even if there was no income. The third group must submit quarterly, the first and second groups annually.
If an individual entrepreneur did not carry out any activities and did not receive any income during the year, they may not submit a declaration. However, this is only possible if the law expressly provides for such a possibility. For example, for an individual entrepreneur who suspended their activities due to martial law or was idle. At the same time, in most cases, tax authorities advise submitting a “zero” declaration in order to avoid questions.
Even without income, an individual entrepreneur is obliged to pay the minimum social security contribution (in 2025 – UAH 1,760/month) if they have not officially suspended their activities.
3. Sole proprietors under the general system
Such sole proprietors submit an annual declaration of property status and income, including zero profit. It is necessary to declare not only income, but also the fact of inactivity in order to close the tax period.
If the activity has been officially terminated (entry in the Unified State Register), then after submitting the liquidation declaration, it is no longer necessary to report.
4. Single tax payers – legal entities
LLCs on a single tax (group 3) submit a declaration on a quarterly basis. Even if there is no income, the declaration should be submitted with zeros.
If a legal entity is in the process of liquidation or has not actually carried out any activities, the declaration does not need to be submitted. However, confirmation is required that there have been no transactions or movements on the accounts.
Enterprises under special regimes/privileges
Non-profit organisations, residents of Diya.City, farmers and other companies with preferential taxation must submit reports even if they have not been operating. The report confirms the right to preferential treatment. If the organisation has not yet started operating and has not had any transactions, it is not necessary to submit a report, but the tax authority must be notified.
For example, a charitable foundation did not carry out any financial transactions in 2024, but still submits a report as a non-profit organisation in order not to lose its non-profit status.
Why not filing a return is a bad idea
If the report is not submitted on time, the tax authority has grounds to consider that the period has not been declared, hence:
- penalties for late/non-submission of the declaration;
- for VAT payers – the risk of blocking the registration of tax invoices;
- the risk of losing tax benefits or supporting documents.
If you did not manage to file your tax return on time, do not panic. The main thing is to file it as soon as possible and pay the tax immediately. This will reduce the amount of the penalty. If errors are found in the documents, they can be corrected in a revised tax return.
If you are not sure whether you have correctly completed your “late return”, it is better to involve specialists in the verification process. CeDePe accountants will check your reports, prepare the correct return and advise you on how to minimise possible penalties. It is important that even late reports are in order.
Useful tips: how to control tax documentation and reduce risks
- Keep a calendar of submissions and payments (electronic office of the State Tax Service, internal calendar). Automate reminders.
- Conduct monthly/quarterly cash reconciliations: even the absence of transactions must be confirmed.
- Keep records (registers, standard accounting form for sole proprietors) so that you have confirmation in case of a request from the tax authorities.
- Check your VAT registration status: registration/deregistration affects your obligations to file returns.
- Monitor your unified social tax (UST): determine whether you are subject to mandatory payment and when; pay the minimum in the absence of income if you are a “single taxpayer”.
Thus, in certain cases, the law allows you not to file a declaration. However, practice shows that businesses with clear document flow logic are less likely to receive claims from the tax authorities. So it is easier to file a zero declaration than to explain its absence later.
