VAT to be charged for individual entrepreneurs starting from 2027: details of new rules.

Changes in the simplified tax system for individual entrepreneurs

According to ТСН: In 2027, changes are planned in the simplified tax system, particularly concerning VAT payments after exceeding a certain income threshold.

The Minister of Finance Serhiy Marchenko noted in an interview:

“There is a task to level the rules of the game for 'simplified' taxpayers and VAT payers, to define common limits for these groups of taxpayers. Our simplified tax system is not only about providing services by small businesses, consulting, and other types of activities. It is also a way to evade tax payments by large unscrupulous businesses that simply use 'simplified' taxpayers. Is it possible to avoid changes in the simplified tax system? No, it is not possible. And the discussion regarding this (with the IMF - ed.) was quite complicated.

The Minister also reported that there will be a transitional period until 2027 to allow businesses to prepare for the new regulations.

According to Marchenko, the IMF insists on the mandatory payment of VAT for individual entrepreneurs if their annual income exceeds 1 million UAH. This change aims to expand the tax base, prevent business fragmentation, and complicate the use of 'simplified' taxpayers as an alternative to hiring employees. Currently, the government has not yet presented official plans regarding the draft law on changes to the Tax Code of Ukraine.

Moreover, the National Bank of Ukraine proposes to complicate the procedure for closing individual entrepreneurs (IEs) to prevent the use of fake entrepreneurs in illegal financial operations.

Such changes in legislation could significantly impact the activities of individual entrepreneurs and the overall economic situation in the country. The transitional period should provide an opportunity for entrepreneurs to adapt to the new conditions, but it is also possible that this will provoke protests among small businesses that may face difficulties due to the new requirements.