In Ukraine, starting from 2027, some individual entrepreneurs (IEs) operating under the simplified taxation system will be required to pay value-added tax (VAT). This was announced by Finance Minister Serhiy Marchenko, who noted that the changes will not affect all entrepreneurs, but only specific categories.
This is reported by Finway
Reasons for changes in the tax system for IEs
According to Serhiy Marchenko, the main goal of the reform is to level the playing field for those using the simplified system and companies that already pay VAT. The minister emphasized that the simplified taxation system has long been used not only by small businesses but also by large companies to reduce their tax burden. This leads to mass registration of employees as IEs and the use of benefits to evade taxation.
“The simplified system has become a tool for tax evasion by unscrupulous large businesses that are mass registering employees as IEs,” the minister explained.
The Ministry of Finance emphasizes that reforming the simplified taxation system is unavoidable. This issue has been discussed multiple times with the International Monetary Fund. A transitional period until 2027 is planned to help entrepreneurs adapt to the new rules.
New tax initiatives and changes in the field of e-commerce
Serhiy Marchenko also added that the reforms will affect not only IEs. The Verkhovna Rada plans to consider a draft law that proposes taxing income from digital platforms. Additionally, taxation of international postal shipments valued up to 150 euros will be implemented.
This initiative has been under discussion for over two years and has received mixed reactions from entrepreneurs. The minister noted that a significant portion of small parcels comes from countries that are not always friendly to Ukraine in a geopolitical sense, referring to China. As a result, legal importers find themselves in uncompetitive conditions, and mass imports negatively impact the country’s balance of payments.
In the future, Ukraine plans to adopt a European model for taxing online purchases: VAT will be collected directly at the time of purchase in stores, as is already the case in EU countries.
The minister shared that this decision is not unexpected, as the relevant changes have long been embedded in the Ministry of Finance’s strategy. According to him, despite the unpopularity of these steps, they are necessary to strengthen the state’s internal revenues and partially replace external financing.
“We were bound to arrive at this point – we will just do it next year. Not from January 1, but after a preparation period,” the minister concluded.