Main points
- The Ministry of Finance proposes to introduce VAT for individual entrepreneurs from January 1, 2027, in particular to combat tax evasion, but the conditions will be different than previously reported.
- The bill also provides for the preservation of military conscription after the war and the introduction of taxation for income from digital platforms, as well as changes to the taxation of parcels from Temu.
The Ministry of Finance revealed the details of the new tax package / Collage of Channel 24, photo ucsc.org.ua
On March 19, the Ministry of Finance published a major tax bill that resonated with Ukrainians. It will regulate the introduction of VAT for individual entrepreneurs, taxation of online platforms, and payment of military duty.
- 1 When will individual entrepreneurs pay VAT?
- 2 Will there be a military conscription after the war ends?
- 3 Will there be an “OLX tax”?
- 4 They want to cancel benefits for parcels from Temu: what will change?
When will sole proprietors pay VAT?
The new draft law from the Ministry of Finance has brought together several important tax innovations that were negotiated with the IMF. In fact, it concerns four key changes that could significantly affect both businesses and ordinary Ukrainians, writes “Ekonomichna Pravda”.
First, the government proposes to expand the application of VAT. If an entrepreneur earns more than 4 million hryvnias per year, he will have to become a payer of this tax.
This is explained by the approximation to European rules. But the business reacts quite critically:
- a lot of reporting;
- risk of errors;
- possible blocking of invoices;
- additional burden on accounting.
In order to somehow ease the new rules for small businesses, the government is offering individual entrepreneurs a number of relaxations. In particular, it is increasing the tax reporting period for them from 1 to 3 months. And for the first five violations committed during VAT administration in the first year of the initiative, individual entrepreneurs will be fined only 1 hryvnia,
– the publication writes.
The documents already include the date of introduction of VAT for individual entrepreneurs – January 1, 2027. Although the possibility of postponement was previously discussed. Acting Head of the State Tax Service Lesya Karnaukh says that the introduction of VAT will affect about 252 thousand out of 2.1 million Ukrainian individual entrepreneurs. Perhaps this will complicate the life of business, but it will help fight tax evasion.
According to our estimates, approximately 30% of business entities that are on the simplified taxation system use business fragmentation schemes,
– says Karnauch.
Note! Although according to the memorandum, all tax changes must be approved by the end of March, the Cabinet of Ministers will probably focus on June: that is when the program will be reviewed and a decision will be made on providing the second tranche.
Will there be a military draft after the war ends?
Another point is the military levy, which was raised due to the full-scale war. It was planned that its payment would be mandatory until the end of martial law, but it seems that it will remain with Ukrainians even after the war ends. Now the rules are as follows:
- 5% is paid by individuals;
- Groups 1, 2, and 4 of individual entrepreneurs pay 10% of the minimum wage per month, group 3 – 1% of income.
The state now plans to leave these rules in place to fund the country's defense and reconstruction.
Will there be an “OLX tax”?
Ukraine also wants to regulate the income that people receive through digital services – from taxis to online sales. This applies to digital platforms such as Bolt, Uber, Uklon, Glovo, Onlyfans, OLX, etc.
Today, if you earn money through services like Bolt, Uklon or sell things through OLX, formally you already have to pay taxes. But in practice, most do not. Not least because the State Tax Service does not have data on the earnings of Ukrainians on digital platforms. This norm should change this situation.
- Separate account for income. Money from platforms will need to be received into a special bank account.
- Control by the tax authority. The tax authority will have access to information about these accounts, and the platforms themselves will transmit income data.
- Less paperwork. You won't have to file a tax return – taxes will be withheld automatically.
- Reduced rate. Instead of 18% personal income tax, they offer 5%. Together with military duty, it makes a total of 10%.
- Income limit. The preferential rate will apply up to approximately 7.2 million hryvnias per year. After that, standard taxation applies.
- Exception for small sales. If you sell goods for small amounts (up to 2 thousand euros), you will not have to pay taxes.
Please note! Special tax rules will not be available to individuals who have an individual entrepreneur; against whom sanctions have been imposed; who have employees; who sell excisable goods or do not have an open special account (to which the tax office will have access).
They want to cancel benefits for parcels from Temu: what will change?
Another important change is that international parcels may lose their main “advantage.” This is the cancellation of duty-free import of goods up to 150 euros.
The corresponding benefit has become one of the drivers of the growth of popularity of Chinese marketplaces, such as AliExpress or Temu. Today, if you order goods from abroad for an amount of up to 150 euros, you do not need to pay anything:
- no VAT (20%);
- no duty (approximately 10%).
It is this norm that has made shopping on foreign marketplaces, especially Chinese ones, extremely popular. The government explains this by several reasons:
- the need to adapt to EU rules;
- combating tax evasion schemes;
- leveling the playing field for Ukrainian business.
The Ministry of Finance's draft law cancels the privilege and imposes the obligation to charge and pay VAT on marketplaces where parcels were purchased.
At the same time, it introduces an exception: Ukrainians will be able to receive parcels free of VAT and customs duties if they are transferred from abroad by other individuals without any payment. The cost of such free parcels should not exceed 45 euros.
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