Ukraine tries to change IMF requirements on taxes for individual entrepreneurs
Ukraine is negotiating with International Monetary Fund to revise the tax conditions under the current loan programme. First of all, it is a requirement to introduce VAT for individual entrepreneurs with an annual income of more than UAH 1 million, sources say RBC-Ukraine.
This condition has become one of the key issues in the negotiations, as it requires the drafting and submission of a relevant bill to the Verkhovna Rada.
Fears of the authorities
According to the publication's interlocutors, the country's leadership is wary of serious political consequences, as the tax reform may affect about 660 thousand individual entrepreneurs. The government fears falling ratings and social discontent against the backdrop of war and economic hardship.
Other IMF tax requirements
In addition to VAT for small businesses, the IMF's conditionality package contains several other sensitive initiatives:
Taxation of internet platforms - the so-called «OLX tax»;
Taxation of international parcels regardless of their cost;
Extension of the collection of 5% military duty and the post-war period.
These measures, according to the IMF, should increase budget revenues and reduce the funding gap.
Risk to the budget
If a compromise with the IMF is not reached in the near future, Ukraine may face a significant budget deficit and the risk of funding delays, which is especially critical in times of war.
Context.
The IMF remains one of Ukraine's key donors. Fulfilling the terms of the programme is important not only for receiving IMF tranches, but also for further financial support from the EU and other international partners, The IMF is a key partner in Ukraine's cooperation with the IMF.
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