Ukraine is preparing VAT for individual entrepreneurs and abolishing parcel privileges: what it means for business and consumers
28 November 17:32
Ukraine is preparing for one of the most notable tax changes in recent years – the introduction of VAT for individual entrepreneurs with an income of more than UAH 1 million. This was reported by a source close to the negotiations with the International Monetary Fund, according to Ukrainian News, "Komersant Ukrainian".
The changes may be part of a new four-year, $8.1 billion IMF program announced this week.
What are the new IMF requirements aimed at?
The new IMF requirements are aimed at expanding the tax base and fighting the shadow economy. VAT for individual entrepreneurs will affect the small business segment, which currently operates under the simplified taxation system and does not pay this tax.
The threshold of UAH 1 million may affect a significant number of entrepreneurs in the IT, trade, services, and logistics sectors. This step formally brings the rules for Ukrainian individual entrepreneurs closer to European standards, but at the same time may increase costs for small businesses in wartime.
What else will change
According to the source, the Cabinet is also considering
- abolishing the exemptionsfor parcels up to 150 euros, which are currently duty-free;
- taxation of income received through digital platforms such as Bolt, Uklon, Glovo, Booking.com.
These measures are part of the IMF’s requirements to combat tax evasion and unify rules for domestic and foreign businesses.
How this will affect citizens
The abolition of the cheap parcel privilege may lead to an increase in the cost of orders from foreign online stores. And the taxation of digital platforms may increase the cost of delivery services, rental housing, and transportation.
At the same time, the government expects that these steps will help generate additional budget revenues needed to finance defense and social spending.
The initiatives are still being finalized, and the government is expected to prepare the relevant legislative changes.
The final decision will depend on the negotiations with the IMF and the Parliament’s readiness to support the tax overhaul.
The day before, the IMF announced that it had reached a staff-level agreement on a four-year program worth about $8 billion. The program will be approved after Kyiv implements a number of spending measures.
