New tax bill: what government officials are saying
27 March 15:00
During negotiations with the International Monetary Fund, Ukraine has reached the highest European VAT threshold. The main goal is to ensure a level playing field for all entrepreneurs. This was stated by Oleksiy Sobolev, Ukraine’s Minister of Economy, Environment, and Agriculture, during a speech in the Verkhovna Rada, according to "Komersant Ukrainian".
“Regarding our plans and how we communicate with sole proprietors and small business owners. Our task is simple. There must be a level playing field for everyone. Everyone supports this. We need to eliminate the schemes that have nothing to do with legitimate, small, and honest businesses,” said Sobolev.
At the same time, he noted, the mechanisms designed to eliminate these schemes must not complicate life for small businesses. In other words, no additional administrative burdens should be imposed on them.
“We have been in active communication with the IMF. And you may recall that initially there was a proposal to set the threshold at 1 million hryvnias. Following our discussions, the proposal is now for 4 million hryvnias, but overall our position is simple: there must be a level playing field and straightforward administration for tax payments, especially for small and medium-sized businesses, which are already struggling,” the minister noted.
According to Ukrainian Finance Minister Serhiy Marchenko, this issue truly falls within the scope of leveling the legal playing field for all businesses in Ukraine.
“And the Minister of Economy correctly noted that during the negotiations, we achieved the highest European level for the VAT threshold. This should be noted. Next, we are simplifying all procedures for registering tax invoices as much as possible, and they will be automated,” he added.
According to the minister, Ukraine is also adopting other decisions that will allow small businesses to minimize administrative costs and create conditions under which it will be profitable for them to operate as VAT payers.
“Because if you understand the nature of VAT, and if you work with non-VAT payers, then no one wants to work with you. It is simply not profitable for VAT payers to work with non-VAT payers. That is why we are creating conditions under which small businesses will gain additional opportunities,” Marchenko explained.
As a reminder, in February, the International Monetary Fund lifted the prior actions for Ukraine’s new $8.1 billion loan program. These included requirements regarding VAT for sole proprietors, customs duties on parcels, a tax on digital platforms, and a military levy.
Ukrainian Prime Minister Yulia Svyrydenko stated that all tax and customs changes removed from the “prior actions” category will become structural benchmarks that must be met for the next program review.
To this end, the draft laws on digital platforms, parcel taxation, the extension of the 5% military levy, and the introduction of VAT for sole proprietors will be consolidated into a single comprehensive bill (the “Beautiful Tax Bill”).
Regarding VAT for sole proprietors, an agreement has been reached to raise the threshold for its application from 1 million to 4 million hryvnias. Consequently, it will affect not 660,000 small business owners, but 257,000.
Last week, the Ministry of Finance of Ukraine published a new “tax bill.”
The explanatory note to the bill states that its adoption will allow for approximately 60 billion hryvnias in tax revenue to be added to Ukraine’s state budget annually and prevent losses in military tax revenue following the termination or repeal of martial law.
