Choosing a tax system for a digital marketing business: the general or the simplified system without VAT

Inputs

The model was built for an LLC with the following parameters:

• Digital marketing services, contractors — bloggers and service providers
• Revenue: UAH 400k/month for the first two months, then from UAH 700k/month
• Costs: about 80% of revenue
• Headcount: up to six employees
• Outsourced accounting

Criteria for choosing the tax system

We analysed six factors: the types of activity, the main counterparties and the VAT logic, the expected turnover and the risk of exceeding the group 3 limit (1,167 minimum wages in 2026 — UAH 10,091,049), the level of costs, the number of employees and the accounting setup. High costs (80%) are an argument for the general system, where tax is paid on profit rather than on revenue.

VAT: staying in line with practice

On the general system, VAT registration is mandatory once turnover reaches UAH 1 million over 12 months; on the simplified one (groups 1–3 without VAT) it is voluntary. Registration can be beneficial, but only if the clients actually “monetise” the input tax credit.

How we did the calculation

Annual revenue: 2 months × 400k + 10 months × 700k = UAH 7.8m. Costs are UAH 6.24m (80%), so profit under the general system is UAH 1.56m. Comparison: corporate income tax at 18% — UAH 280,800 — versus the single tax at 5% + a 1% military levy — UAH 468,000. For these parameters the general system gives a lower total burden.

Accounting outsourcing as an economic factor

Approximate annual cost of support: about UAH 100k on the simplified system and about UAH 300k on the general one (more complex accounting). This difference was also taken into account in the final decision.

Conclusion

There is no universal answer: the decision depends on the calculated tax burden, growth risks and the real requirements of clients, including regarding VAT. We recommend modelling the burden on your own revenue and cost structures.