Finance Ministry publishes bill on VAT for entrepreneurs, extended military levy, digital platform taxation and parcels

The Finance Ministry published on its website a major tax bill that includes provisions on mandatory value-added tax (VAT) registration for simplified-system entrepreneurs with annual revenues from UAH 4 million, taxation of imported parcels valued up to EUR 150, extension of the 5% military levy after the war, and introduction of international automatic exchange of information on income received through digital platforms and taxation on digital platforms (Uklon, OLX, etc.).

"Adoption of the bill will allow for additional state budget revenue of approximately UAH 60 billion annually and prevent losses of military levy revenues ... after the termination or cancellation of martial law," according to the 42-page explanatory note to the bill, which aligns with Ukraine’s tax commitments under the program with the International Monetary Fund (IMF).

According to the document, the deadline for mandatory VAT registration for simplified-system entrepreneurs is January 1, 2027. As relief measures, the bill proposes making the calendar quarter the tax reporting period for VAT payers who pay the single tax, and applying penalty sanctions of UAH 1 for the first five violations during 2027. This concerns violations of deadlines for registering tax invoices/adjustment calculations in the Unified Register of Tax Invoices and/or violations of rules for accrual and payment of monetary obligations. The bill also proposes granting the right to compile consolidated tax invoices in case of supply of goods (services) and/or receipt of advance payment for goods (services) to persons not registered as VAT payers, no later than the last day of the month.

Regarding the military levy, it is now proposed to collect it not until the cancellation of martial law, but until the Verkhovna Rada’s decision on completion of the Armed Forces of Ukraine reform takes effect. In addition, for individual entrepreneurs who are single tax payers of the first, second and fourth groups, the Finance Ministry wants to set it at 10% of one minimum wage (in 2026 – UAH 850), and for single tax payers of the third group (individual entrepreneurs and legal entities) (except electronic residents) – 1% of income.

Regarding taxation of income from digital platforms, the Finance Ministry notes that currently they are subject to taxation at a rate of 18%, while it proposes to reduce it to 5% and not tax it at all if the total amount for the reporting year does not exceed the equivalent of EUR 2,000 at the National Bank’s official exchange rate. At the same time, there is no requirement to open a current account at a bank for reporting activities, and the reporting seller has the right to use existing current bank accounts opened for personal needs.

The bill stipulates that the tax agent for an individual reporting seller is the reporting platform operator who accrues or provides income.

Regarding parcel taxation, the bill proposes to introduce special taxation rules for distance sales of goods (except excisable goods) with a total value not exceeding EUR150 equivalent, from another country’s territory to Ukraine’s customs territory to a recipient — an individual who purchased such goods through an electronic interface.

At the same time, the document contains a provision on VAT exemption for parcels worth up to EUR 45 intended for personal or family use by the recipient.

To implement the parcel taxation provision, the bill contains amendments to the Tax Code to enable VAT payment by the sender. Specifically, it proposes to designate a non-resident electronic interface enterprise as the party responsible for accrual and payment of VAT to the budget and establish an obligation for it to maintain records of distance sales of goods.

Under the terms of the new $8.1 billion EFF program approved in late February, Ukraine must adopt the above-described package of tax measures by the end of March 2026.

The Verkhovna Rada on March 10 rejected a bill on taxation of income through digital platforms, which received only 168 votes with 226 needed.