Closure of FLPs in Ukraine: trends in 2024 and forecasts for 2025
8 January 2025 17:46
PROGNOSIS
In 2024, almost 210 thousand physical persons-entrepreneurs (PEPs) will close in Ukraine – this is 32% more than in 2023 and the highest figure for the last five years. This is evidenced by the study YouControl.Market. At the same time, economists urge not to panic and note positive trends. What this means for Ukraine and its economy –
Among the industries that have become leaders in the closure of FLP and most affected, highlighted:
- Retail trade – more than 65 thousand closed FLP;
- IT sector – almost 39 thousand;
- Other services – more than 26 thousand.
Particular attention is drawn to the IT sector, where the closure of FLPs in 2024 (38.7 thousand) increased by 29% compared to 2023 (29.9 thousand), and if compared to 2021 (14.3 thousand), the increase reaches 161%.
Regional distribution
The greatest increase in the closure of FLP compared to the previous year was recorded in such regions:
- Poltava region – an increase of 57.2%;
- Kirovograd region – an increase of almost 55%;
- Vinnitsa region – increase by 45%.
Against the background of closure of enterprises there is a decline in the registration of new ones. In 2024, their number will decrease by 5% compared to 2023. Economist Oleg Pendzin in an exclusive commentary for the
“The closure of FLPs is not a critical indicator. The total number of new entrepreneurs exceeds the number of closed ones. After the active phase of hostilities began in 2022, the number of FLPs created increased significantly. In 2024, they were opened one and a half times more than in 2021, because many people lost their jobs and chose self-employment as a way of survival and family support” – Oleg Pendzin
The expert also notes that for the state the existence of FLP means a reduction in expenditures on support for the unemployed:
“FLP is a way for people to provide themselves with work and at the same time relieve the state of part of the financial burden” – Oleg Pendzin
Despite the significant increase in the number of closed FLPs, the overall dynamics remains positive due to the opening of new businesses, which reflects the adaptation of Ukrainians to the challenges of wartime, summarizes the economist.
New tax rules for FLPs in 2025
From January 1, 2025 introduce new tax rules for individual entrepreneurs (FLP).
The adopted law provides for:
- Raising the military levy rate from 1.5% to 5%.
- Establishment of the obligation to pay the military levy for single tax payers:
- 1% of income for third group payers;
- 10% of the minimum wage for the first, second and fourth groups (equivalent to 5% of two minimum wages).
- Extension of the military levy taxation features until the end of the year when martial law is lifted.
- The basic corporate income tax rate for non-banking financial institutions (except insurers) is set at 25%.
The introduction of new rules from the beginning of 2025 was to give entrepreneurs time to prepare for the changes, as well as to adapt their strategies to the updated legislation under martial law.
Author – Anastasia Fedor
