New NACE 2.1-UA Codes: Preparing for the Transition

Pursuant to the Law of Ukraine No. 755-IV dated May 15, 2003  “On State Registration of Legal Entities, Individual Entrepreneurs, and Public Associations” (the “Law No. 755”), information on types of economic activities is included in the Unified State Register (USR) at the time of state registration of an enterprise and an individual entrepreneur, and may be updated based on an application filed. Consequently, over the next two years (until the end of 2028), most businesses are likely to undergo a large-scale re-registration process, unless an alternative mechanism for updating codes is introduced. For now, no such mechanism exists, and new businesses continue to be registered under KVED-2010.

However, the transition process has already begun. At the end of May, the State Statistics Service published the mapping tables between KVED-2010 and NACE 2.1-UA. These tables enable businesses to determine whether they will need to amend their registration documents and records, or whether the codes will be updated automatically (in cases of full equivalence).

When these tables are reviewed, particular attention should be paid to whether any activity titles and descriptions have been reworded or whether their numerical codes have changed. This review must be conducted carefully, as a table may indicate a 1:1 correspondence while, in practice, even a minor change in digits (e.g., from 68.10 to 68.11) may occur.

In some cases, several KVED codes may be consolidated into a single NACE 2.1-UA code. In others, a single KVED code may be split into multiple new codes in NACE 2.1-UA. There are also situations where parts of different KVED codes are redistributed between several NACE 2.1-UA codes. This means that not only the code itself may change, but also the description of the economic activity.

At the same time, businesses should not only review the codes currently listed in the USR and the Single Taxpayer Register but also analyze the activities actually carried out. Previously, in the absence of exact matches, businesses often used approximate codes. Therefore, new codes should be selected based on actual business activities.

The analysis of certain KVED-2010 codes, which will be split into multiple new ones, does not mean that all resulting codes must be registered. It is sufficient to retain those that genuinely reflect the activities performed. This will be particularly relevant for sectors such as trade, agriculture, IT services, information services, logistics, and professional services, where the new classification provides a much higher level of detail and focuses on specific rather than general activities.

Note: It is not recommended to include codes in the new system “just in case” if the corresponding activities are not actually performed.

Special attention should be paid to businesses that require licenses or permits for specific activities and those participating in tenders and public procurement.

Entrepreneurs using the simplified taxation system should also exercise caution. Incorrectly specified or incomplete activity codes may result in the loss of eligibility for the single tax regime. Ukrainian tax legislation requires taxpayers to declare all types of economic activities in the Single Taxpayer Register and to operate strictly within those declared activities. Conducting activities not listed in the Register may lead to higher tax rates for individual entrepreneurs (groups 1–3) and removal from the simplified taxation system.

For legal entities, not only activity codes must be reviewed but certain documents must be prepared. This may include drafting shareholder resolutions or general meeting minutes, notarizing signatures, and submitting the relevant documents to a state registrar, notary, or through another procedure to be established by law.

Natalia Shcherbak, tax and аccounting consultant