Ukrainian govt, IMF plan to postpone discussion on VAT for sole proprietors for one year – media

The Cabinet of Ministers of Ukraine and the International Monetary Fund (IMF) are discussing the possibility of postponing the mandatory value-added tax (VAT) registration for sole proprietors with an annual income exceeding UAH 4 million until 2027, Forbes Ukraine reported, citing government sources.

According to the publication, a final decision is expected during the fund's mission visit to Kyiv in late spring. Negotiators also agreed to strengthen the fight against tax schemes, specifically the practice of splitting large companies into networks of sole proprietors to minimize taxes.

In addition, the government is expected to step up efforts to bring the tobacco market out of the shadows and counter "under-the-table" wage payments. A source told the publication that a sanctions mechanism is being considered for large businesses that avoid transitioning to the general taxation system, along with establishing minimum wage thresholds for certain industries where official employee incomes are significantly lower than market rates.

According to the report, the IMF's conceptual vision and the task for the Ministry of Finance is not only to reduce the shadow economy but also to achieve a fiscal effect of UAH 40 billion, which was expected from the initiative to introduce VAT for sole proprietors.

A key part of the agreements should be increasing the efficiency of the State Tax Service, the State Customs Service, and the Bureau of Economic Security (BES).

In parallel, another IMF requirement is being discussed: the abolition of duty-free customs clearance for parcels valued up to EUR 150 (bill No. 15112-1). This structural benchmark of the program was supposed to be met by Ukraine by the end of March 2026, as was the extension of the 5% military tax after the end of martial law, and the introduction of international automatic exchange of information on income received through digital platforms (Uklon, OLX, etc.). However, according to Forbes Ukraine, there are few votes in the Verkhovna Rada, and work to secure them continues.

The Ministry of Finance told Interfax-Ukraine that the implementation of bill No. 15112-1 is expected to provide additional state budget revenues of about UAH 10 billion annually.

As reported, the Association of Ukrainian Cities appealed to Prime Minister Yulia Svyrydenko to exclude the mandatory VAT requirement for sole proprietors from the National Revenue Strategy through 2030. The European Business Association (EBA) called on the Cabinet and parliament to find fair solutions to combat abuses of the simplified taxation system that do not involve increasing the burden on transparent businesses.

The prime minister confirmed on April 19 that, following negotiations with the IMF, the idea of introducing VAT for sole proprietors was recognized as non-constructive due to its high sensitivity for society and parliament. Since then, the parties have been discussing alternative sources to fund the 2027 state budget.

Earlier, Servant of the People deputy faction head Andriy Motovylovets said that the Verkhovna Rada is not ready to support the government's bill on VAT for sole proprietors at this time, a condition for IMF cooperation, and is requesting additional calculations and explanations.