The introduction of value-added tax (VAT) for sole proprietors in Ukraine has been postponed. This was announced on April 19 by Prime Minister Yulia Svyrydenko following consultations with the International Monetary Fund during the Spring Meetings in Washington. According to her, the IMF agreed that this initiative is sensitive both for society and for the parliament, and does not appear constructive under current conditions. The Ukrainian side and its partners agreed to look for alternative solutions to ensure state budget revenues for 2027.
The idea of introducing VAT for sole proprietors was considered as part of broader tax changes within Ukraine’s commitments to the IMF. The Ministry of Finance proposed requiring entrepreneurs and companies under the simplified tax system to register as VAT payers once a certain turnover threshold is exceeded. Different versions of the proposal mentioned a threshold ranging from UAH 1 million to UAH 4 million in transactions over the past 12 months. According to estimates, this could have affected hundreds of thousands of single tax payers, primarily sole proprietors in the second and third groups.
Parliament representatives confirm that progress on this initiative has been paused. First Deputy Speaker of the Verkhovna Rada Oleksandr Korniienko noted that during wartime, the parliament is not ready to support decisions that could significantly impact small businesses. According to him, the draft law has been postponed by mutual agreement with the IMF in order to develop a more balanced approach. At the same time, the government is expected to propose alternative sources of budget revenues, as the potential fiscal effect of the initiative was estimated at around UAH 20 billion.
Some members of parliament emphasize that the issue has not been removed from the agenda but merely postponed. Further parameters may be defined after the updated IMF memorandum, expected in the summer. At the same time, the topic of VAT for sole proprietors is already reflected in strategic policy documents, including the National Revenue Strategy through 2030.
The discussion around this initiative is linked not only to fiscal considerations but also to efforts to reduce tax abuse, particularly through networks of sole proprietors. Authorities are also signaling increased oversight in these areas, including checks of business models that may be used to minimize tax liabilities.
For businesses, this means that in the near term, the rules of the simplified taxation system remain unchanged, and the mandatory introduction of VAT for sole proprietors in 2027 is not currently a baseline scenario. At the same time, the discussion is ongoing, and the issue may return in future negotiations with international partners alongside the search for alternative budget revenue sources.
