Ukraine, IMF discuss alternatives to VAT for sole proprietors to fill 2027 budget

Ukraine and the International Monetary Fund (IMF) are discussing alternatives to value-added tax (VAT) for sole proprietors to support budget revenues in 2027, Prime Minister Yulia Svyrydenko said.

"The IMF has shown understanding regarding the sensitivity of introducing VAT for sole proprietors for both society and parliament," she wrote on Telegram on Sunday evening.

The prime minister said that during the Spring Meetings, the parties reached a shared understanding that this is indeed a sensitive issue and not a constructive idea. According to her, Ukrainian President Volodymyr Zelenskyy has repeatedly raised this point with IMF representatives.

"During the Spring Meetings in Washington, we held numerous consultations with the IMF and European partners. We will continue to work together on the necessary solutions and explore alternative measures to ensure budget revenues for 2027," Svyrydenko said.

As reported, a bill abolishing the VAT exemption for sole proprietors could be replaced by extending the increased corporate income tax rate for banks starting January 1, 2027, according to Serhiy Naumov, president of the National Association of Banks of Ukraine.

Earlier, Andriy Motovylovets, deputy head of the Servant of the People parliamentary faction, said the Verkhovna Rada is not currently ready to support the government’s bill introducing VAT for sole proprietors, adoption of which is a condition for cooperation with the IMF, and is requesting additional calculations and explanations.

On March 20, the Ministry of Finance published on its website the so-called "large tax bill," which includes provisions on mandatory VAT registration for simplified-tax-system entrepreneurs with annual income starting from UAH 4 million, taxation of imported parcels valued up to EUR 150, continuation of the 5% military levy after the war, as well as the introduction of international automatic exchange of information on income earned via digital platforms and taxation of digital platforms (Uklon, OLX, etc.).