Ukraine to revise VAT draft for individual entrepreneurs, Sobolev says

The draft law on value-added tax (VAT) for individual entrepreneurs, published by the Ministry of Finance, will be revised, Minister of Economy Oleksiy Sobolev said in an interview with LIGA.net.

"We see that the proposal to introduce VAT for individual entrepreneurs with annual income above UAH 1 million is creating tension for businesses. Therefore, together with the Ministry of Finance, we are consulting with entrepreneurs, experts, and think tanks. We need to balance support for small business with our commitments to the IMF," Sobolev said.

He stressed that the changes would take effect only in 2027, and the version published so far is a basic working draft that still requires technical revisions.

According to Sobolev, the main goal of the legislation is to close loopholes that allow large companies to "split" operations into multiple small entities to avoid taxation.

"Decisions concerning all individual entrepreneurs will continue to be coordinated with the Ministry of Finance and business associations after the war — including the income threshold, transition period, and exemptions — so that the reform does not create additional bureaucracy," he said.

The draft law proposes that, starting January 1, 2027, single tax payers (except e-residents of the third group) must register for VAT if their sales of goods or services — including online sales via websites and apps — exceed UAH 1 million (excluding VAT) in the previous 12 months.

Based on 2024 data, around 660,000 single taxpayers would be affected, mostly individual entrepreneurs in the second and third tax groups.

• The adoption of the draft law is part of Ukraine’s IMF commitments and is included in the country’s National Revenue Strategy.