How the work of individual entrepreneurs will change: The Ministry of Finance is preparing a large-scale reform
6 December 07:44
The Ministry of Finance of Ukraine has announced that it is preparing large-scale changes to the rules for individual entrepreneurs operating under the simplified taxation system. In particular, these include new requirements for VAT payer registration and the elimination of schemes that cause billions of dollars in losses to the state budget each year.
The Ministry said that the changes may come into force no earlier than 2027, and the process of reforming the tax system is being carried out within the framework of Ukraine’s obligations to the International Monetary Fund.
Why the Ministry of Finance initiates changes for individual entrepreneurs
The Ministry notes that the purpose of the reform is not to raise taxes, but to combat shadow schemes that have long been widespread in the simplified system. These include
- using individual entrepreneurs to optimize the taxation of large companies;
- splitting up businesses to avoid high rates;
- gray imports and other schemes that distort competition.
Experts estimate that such practices deprive the budget of tens of billions of hryvnias every year.
The Ministry of Finance emphasizes that the reform should ensure a level and fair playing field for all entrepreneurs while preserving legal advantages for bona fide small businesses.
Key areas of future changes
The Ministry of Finance is working on several key decisions:
New rules for the registration of VAT payers
The Ministry emphasizes that it is not about the automatic abolition of privileges, but it is necessary to create a balanced mechanism that will not allow large companies to disguise their activities as small entrepreneurs.
Transparent administration and reporting
It is planned to develop electronic tools to track transactions, avoid duplication and reduce the possibility of manipulation.
Expanding the tax base and de-shadowing
De-shadowing is one of the main points of the EFF program with the IMF for 2026-2029. Ukraine undertakes to increase budget revenues without raising tax rates, namely by eradicating gray business.
Why the changes will not take effect until 2027
The Ministry of Finance explains that a long transition period is needed for comprehensive work:
- business preparation and consultations with entrepreneurs;
- creation of digital administration systems;
- harmonization of legislation with international partners;
- avoiding shock scenarios for small businesses.
Thus, the reform will be prepared in stages to avoid risks and maintain support for entrepreneurs.
Why the state needs more revenue now
Part of the need for reforms is explained by the fact that all available resources of Ukraine are directed to defense. The draft budget for 2026 allocates more than UAH 2.8 trillion for the security and defense sector, a record figure.
De-shadowing the economy and stopping abuses in the simplified tax system should be one of the main sources of additional revenues to finance defense needs.
