Ukraine, IMF discussing alternatives to VAT on individual entrepreneurs to fill 2027 budget

MOSCOW. April 20 (Interfax) - Ukraine and the International Monetary Fund (IMF) are discussing an alternative to VAT on individual entrepreneurs as part of efforts to ensure budget revenues in 2027, Ukrainian media quoted Prime Minister Yulia Sviridenko as saying.

"The IMF has shown understanding that the introduction of VAT on individual entrepreneurs is a sensitive issue both for society and for parliament," media outlets quoted Sviridenko as saying in a statement on social media.

During the Spring Meetings of the IMF and World Bank Group in Washington last week, Ukraine found the sides' understanding that this is indeed a sensitive matter and not a constructive idea, she said.

"We held multiple consultations with the IMF and European partners. We will continue working together on necessary decisions and exploring alternative measures to ensure budget revenue for 2027," Sviridenko said.

As reported, Ukraine's National Association of Bank President Sergei Naumov expects that a bill abolishing the VAT exemption for individual entrepreneurs can be replaced by an extension of the increased corporate income tax rate for banks starting from January 1, 2027.

Servant of the People faction deputy head Andrei Motovilovets said earlier that the Verkhovna Rada is not ready at this point to support the government's bill introducing VAT for individual entrepreneurs, requesting additional calculations and clarification. The adoption of the bill is a condition for cooperation with the IMF.

The Finance Ministry published a so-called large tax bill on its website on March 20, outlining provisions on mandatory VAT registration for entrepreneurs who have annual income of UAH 4 million or more and currently use the simplified taxation system, taxation of imported parcels valued at up to 150 euros, the extension of the 5% military tax after martial law is lifted in Ukraine, the introduction of an international automatic system to exchange information on income earned via digital platforms, and taxation of digital platforms.