From 2027, certain individual entrepreneurs in Ukraine will be required to pay VAT: what changes await businesses
In Ukraine, significant tax changes are expected for individual entrepreneurs (IEs) operating under the simplified taxation system starting in 2027. Certain categories of entrepreneurs will be required to pay value-added tax (VAT), aimed at ensuring equal conditions for all participants in the business environment.
This is reported by AgroReview
Reasons for changes in tax policy for IEs
As explained by Finance Minister Serhiy Marchenko, the new measures are aimed at “leveling the playing field” between those using the simplified system and companies that are already VAT payers. According to the minister, the simplified taxation system has long been used not only by small businesses but also by large enterprises to minimize tax liabilities. This is why the government has decided to implement changes to avoid tax abuse.
“The simplified system has become a tool for tax evasion by unscrupulous large businesses that massively register employees as IEs,” the minister explained.
The Ministry of Finance emphasizes that reforming the simplified system is no longer avoidable. Prolonged negotiations have taken place with the International Monetary Fund on this issue. At the same time, a transitional period until 2027 is provided for entrepreneurs to prepare for the new rules.
What other changes await businesses and consumers
According to Marchenko, the changes will not only affect IEs. A draft law on taxing income from digital platforms is already in the Verkhovna Rada. Additionally, there are plans to implement taxation on international parcels valued up to €150. Discussion of this initiative has been ongoing for two years, but it has faced some resistance from market participants.
The Finance Minister noted that a significant portion of small parcels comes from countries that are not always friendly towards Ukraine in geopolitical terms. This creates uncompetitive conditions for legal importers and negatively impacts the country’s balance of payments.
In the long term, Ukraine plans to transition to a European model of taxing online purchases, where VAT is paid directly at the time of purchase in stores, as has already been implemented in EU countries.
Serhiy Marchenko emphasized that such unpopular but necessary steps will help strengthen the state’s internal revenues and partially replace external financing. He also noted that the decision was not unexpected, as the relevant provisions had been laid out in the Ministry of Finance’s strategy in advance.
The minister concluded that the reform will be implemented after the preparatory period, rather than starting on January 1, to give businesses time to adapt to the new tax requirements.