Can an individual entrepreneur include in expenses the funds paid for the software?

Can an individual entrepreneur include in expenses the funds paid for the software?

The question is often. Let’s try to figure it out. Can an individual entrepreneur include in expenses the funds paid for the purchase of software used for doing business?


The procedure for taxing the income of IE is determined by Art. 177 TCU


According to paragraph 177.2 of the Tax Code, the object of taxation is net taxable income. It is the difference between the total taxable income (cash and non-cash receipts) and the documented expenses of such the IE. The list of expenses directly related to the receipt of income by the IE is established by paragraph 177.4 of the TCU.

On p. 177.4.5 TCU, the expenses of the IE under the general taxation system do not include:


? expenses not related to the implementation of economic activities by such the IE;


? acquisition costs, independent production of fixed assets;


? expenses for the acquisition of intangible assets subject to amortization;


? expenses for the acquisition and maintenance of fixed assets, defined by paragraphs 8 – 10 pl. 177.4.6 p. 177.4 of the TCU;


? undocumented expenses.


The sub-paragrath 177.4.6 of the TCU establishes the IE in the general taxation system have the right (at their own request) to include depreciation deductions in the composition of expenses related to the implementation of their economic activities, with the appropriate allocation of a record of such expenses. In this case, acquisition costs of intangible assets are subject to depreciation. According to p. 4 of the National Accounting Rules (Standards) 8 “Intangible Assets” approved by order of the Ministry of Finance dated October 18, 1999 Me 242. an intangible asset is a non-monetary asset has no tangible form and can be identified.


Sub-paragrath 177.4.9 of the TCU establishes the amortization is charged over the useful life (operation) of an item of fixed assets and intangible assets, independently established by an individual. But there is not less than the minimum permissible useful life of an item of fixed assets and intangible assets. For group 4 “Intangible assets” – in accordance with the title document, but not less than two years. This clause applies only to items of fixed assets and intangible assets, the acquisition costs or independent production of which are documented.


Consequently, an individual who is an entrepreneur in the general taxation system has the right (at his own will) to include in expenses depreciation deductions from the cost of purchasing software used for conducting business activities, the acquisition costs of which are documented by relevant documents with keeping separate records of such expenses.