Ukraine's Ministry of Finance has disclosed a key parameter of the upcoming tax reform for small businesses: the obligation to register as a value-added tax (VAT) payer is planned to extend to individual entrepreneurs whose annual turnover exceeds 85,000 euros. In the national currency, this amounts to more than 4 million hryvnias. This was reported by RBC-Ukraine, citing Interfax-Ukraine, which in turn referenced a statement by Deputy Finance Minister Svitlana Vorobey.

The 85,000-euro threshold: who will be affected by the change

According to Vorobey, exceeding the annual turnover threshold of 85,000 euros will serve as the trigger for automatically enrolling an entrepreneur in the register of VAT payers. The deputy minister emphasized that Ukraine had managed to agree with international partners on the highest possible threshold, which should reduce the burden on small and medium-sized businesses and delay the point at which an entrepreneur is forced to switch to a more complex tax administration system. As a result, sole proprietors with turnover below this level will retain the current tax payment arrangement under the simplified system.

The European integration context: Directive 112

Svitlana Vorobey separately stressed that the introduction of VAT for sole proprietors is not the initiative of a single department. "VAT for sole proprietors is not an invention of the Ministry of Finance. It is not an invention of the Tax Service, and it is not an invention of the Verkhovna Rada. VAT for sole proprietors is a requirement of Directive 112, which regulates the administration of value-added tax in EU countries," the deputy minister stated. Thus, the department positions the reform as the fulfillment of Ukraine's European integration commitments, rather than as an arbitrary decision by domestic authorities.

Commitments to the IMF and the postponement of deadlines

The introduction of VAT for payers under the simplified taxation system is also one of Ukraine's commitments to the International Monetary Fund under the Extended Fund Facility (EFF) program. At the same time, as sources recall, back in July the IMF agreed to postpone the deadline for introducing VAT for individual entrepreneurs by one year. This means that the reform does not take effect immediately but will be implemented on a revised schedule, giving businesses additional time to prepare.

Contradictory data

The provided materials contain inconsistencies that should be taken into account. First, although the IMF agreed to postpone the deadlines by one year, the specific calendar date on which VAT for sole proprietors takes effect is not unambiguously fixed in public statements — different sources mention the deadlines without reference to an exact day. Second, the 85,000-euro threshold is characterized as the result of negotiations and as the "highest possible," which implies the existence of lower initial proposals; yet public statements do not disclose what exact threshold was proposed before the bargaining. Finally, related materials emphasize that VAT is not the only change the Finance Ministry is preparing for sole proprietors, however the list of other innovations is not detailed in this context.

What's next: new rules for sole proprietors

According to industry publications, the introduction of VAT is only part of a broader package of changes that the Ministry of Finance is preparing for individual entrepreneurs. This indicates that the reform will affect not only the rate and the threshold, but also the accompanying administrative rules. For businesses, the key question remains the practical implementation: how exactly the annual turnover will be calculated, how registration as a VAT payer is carried out, and what transition periods are provided for. Answers to these questions will, most likely, be clarified as the regulatory acts are prepared.