VAT for individual entrepreneurs in Ukraine has not been cancelled but postponed until 2027. The final decision on the introduction of the tax is due in May, Forbes reports. The Ukrainian authorities are preparing a comprehensive plan to de-shadow the economy, which is a key condition for receiving the next IMF tranche.
VAT for individual entrepreneurs: new terms and conditions
The Ukrainian government has almost reached an agreement to postpone the introduction of VAT for individual entrepreneurs until 2027. According to the Forbes, The final decision on this issue is expected in May. The postponement was a compromise between the Ukrainian authorities and the International Monetary Fund, which insists on improving tax discipline in the country.
The VAT was supposed to be a significant step towards budget revenues, but now businesses have been given additional time to adapt. At the same time, the government is preparing a number of changes to help bring the economy out of the shadows and ensure the stability of public finances during the war.
Plan to de-shadow the economy
For further information, please contact financial support from the IMF Ukraine is developing a large-scale plan to de-shadow its economy. Key measures include strengthening control by the tax service, customs and the Bureau of Economic Security. Particular attention is to be paid to combating tobacco smuggling and the payment of salaries in envelopes.
The plan also includes a ban on paying the minimum wage where market wages are significantly higher. In addition, the government intends to impose sanctions on large businesses that minimise their tax burden by splitting up companies into a network of individual entrepreneurs. These steps should increase tax revenues and reduce the shadow sector.
IMF requirements and the Parliament's position
The International Monetary Fund continues to insist on broadening the base taxation in Ukraine. In addition to VAT for individual entrepreneurs, the IMF's requirements include the introduction of taxation of international postal services. However, the Verkhovna Rada currently lacks the votes to pass the relevant draft law.
The issue of parcel taxation remains controversial, as it directly affects small and medium-sized businesses and consumers. At the same time, compliance with the IMF's tax requirements is a prerequisite for receiving the next financial tranches, which is critical for the stability of the Ukrainian economy.
Why it matters
The postponement of VAT for individual entrepreneurs until 2027 allows businesses to prepare for the new tax rules and avoid additional burdens during the difficult war period. However, this decision does not mean that the tax will be abolished, and the final version will be approved in the near future.
The large-scale de-shadowing plan being prepared by the government is crucial for further cooperation with the IMF. Not only the financial support, but also the overall sustainability of the state budget depends on the fulfilment of these conditions. Ukrainian business and society should closely monitor further decisions of the authorities and prepare for changes in tax policy.
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