Main points
- The IMF has approved a new program for Ukraine, which includes VAT payment for individual entrepreneurs with a turnover of over 4 million hryvnias from 2027.
- The introduction of VAT for individual entrepreneurs may create an additional burden and increase the costs of entrepreneurs, but it is expected to bring an additional 40 billion hryvnia to the budget.
What will happen to VAT for individual entrepreneurs in Ukraine / Depositphotos
The IMF has approved a new financing program for Ukraine, which raised the controversial issue of VAT for individual entrepreneurs. Due to disapproval from business and the government, some conditions were changed, but individual entrepreneurs will still have to pay this tax in any case.
What conditions does the IMF set regarding VAT for individual entrepreneurs?
By the end of March this year, Ukraine must adopt a package of tax measures for 2026-2027, Forbes writes.
In particular, they plan to cancel VAT benefits for simplified tax payers . From January 1, 2027, entrepreneurs on the simplified system whose annual turnover exceeds the established limit will be required to register as value added tax payers.
We will eliminate the possibility of abusing the simplified taxation system (ST) for the purpose of tax evasion. The threshold will be raised moderately, but it will not exceed 4 million hryvnias,
– says the memorandum submitted by the Ukrainian side.
What are the losses for individual entrepreneurs due to the introduction of VAT?
By the way, previously the IMF demanded payment of VAT from individual entrepreneurs whose income exceeds 1 million hryvnias. Business criticized this proposal of the Ministry of Finance. Entrepreneurs believe that the introduction of taxation of individual entrepreneurs creates an additional burden:
- there is a need to hire an accountant, a need for administration and reporting;
- risks of fines in the future;
- cash flow gaps, which will ultimately affect the price for the consumer.
According to the calculations of the Ministry of Finance, this should bring an additional 40 billion hryvnias to the budget, said People's Deputy Nina Yuzhanina.
According to her, if the previous rules with a limit of 1 million hryvnia were in effect, 628 thousand entrepreneurs in Ukraine would have been forced to pay VAT. For one individual entrepreneur, this is more than 60 thousand hryvnias extra per year (according to 2024 data).
In fact, these are very underestimated calculations, since VAT can amount to 20% of turnover if the individual entrepreneur does not receive registered tax invoices from his suppliers. And then the amount of VAT payment for one individual entrepreneur will be from 220 thousand to 740 thousand hryvnias per year (this is 20% of the average turnover),
– said the MP.
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What is known about the new IMF program?
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On February 26, the IMF Board of Directors approved a new four-year extended financing program for Ukraine, totaling $8.1 billion.
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The new IMF program is part of broader international support to cover a projected budget deficit of $136.5 billion over four years.
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The allocation of money from the IMF also implies the continuation of reforms and, most importantly, a reduction in debt payments on the official debt.