The Ministry of Finance has submitted for public discussion a draft law that provides for a change in approaches to VAT administration for single tax payers. The documents are published on the official website of the department.
The Ministry of Finance emphasizes that this is not about immediate changes, but about long-term planning.
“We understand that any tax changes cause concern, so we emphasize that the implementation is proposed no earlier than January 1, 2027. We have time to jointly develop a high-quality, fair solution that will work for the defense of the country, not for shadow schemes,” the department noted.
The purpose of the bill is to unify the rules for businesses with the same turnover, reduce the possibilities of using the simplified system for aggressive tax optimization, business fragmentation, “gray imports” and smuggling, while maintaining protection for bona fide small businesses.
“The purpose of the bill is to make the rules the same for businesses with similar turnover and protect honest small businesses,” the Ministry of Finance emphasized.
Among the key provisions — postponing the entry into force of the law until January 1, 2027, which, according to the ministry, gives business and the state enough time to adapt. For single tax payers of the third group with a rate of 5%, it is envisaged that if they reach a turnover of 1 million UAH, they will become VAT payers, and the single tax rate will be reduced to 3%.
“If you are in the 3rd group (5%) and reach the limit of 1 million UAH, you will become a VAT payer, and the rate will be reduced from 5% to 3%,” the department explains.
At the same time, the requirement for mandatory registration as a VAT payer will not apply to electronic residents – single tax payers of the third group. It is also envisaged that registration and reporting will take place online, and the software will be finalized for convenient work via an electronic account. “Registration and reporting will be carried out online,” the Ministry of Finance notes.
The explanatory materials specifically focus on simplifying reporting, developing electronic document flow, and reducing the risks of abuse by regulatory authorities due to clearer norms of the Tax Code. The ministry also emphasizes that VAT complicates the sale of illegally imported goods, since taxpayers need an official tax credit. “VAT makes it unprofitable to sell illegally imported goods,” the department explains.
According to preliminary calculations, the implementation of the proposed changes could provide additional revenues to the budget of about UAH 40 billion per year, which are planned to be directed to security and defense needs. The Ministry of Finance called on business and the expert community to actively participate in the discussion and provide substantiated proposals.
“The new rules should be as fair and convenient as possible for bona fide small businesses,” the department summarized.
