Ukrainian Sole Proprietors Face Tax Risks from 2026 Security Service Payments.

Upcoming Challenges for Ukrainian Entrepreneurs in 2026

According to Novyny.live: Ukrainian entrepreneurs could face significant difficulties in 2026 when receiving payments for security services rendered before January 1, 2026. These payments may trigger the cancellation of their single tax status and result in fines. This stems from Law No. 4698-IX, which took effect on December 3, 2025, and prohibits individual entrepreneurs (sole proprietors) on the simplified tax system (Groups 2-3) from engaging in security activities starting in 2026. This regulatory shift is part of broader efforts to formalize and regulate specific sectors of the economy.

Essential Conditions to Avoid Penalties

For entrepreneurs providing security services, the allowable expense ratio is set at 15% of the received amount, which could become an additional burden for those unable to continue in this field. Sole proprietors must be extremely cautious, as a problematic payment to their business account can lead to severe consequences. To avoid penalties for such payments, individual entrepreneurs must meet specific conditions:

• Provide proof that the services were rendered before January 1, 2026;
• Confirm the removal of prohibited economic activity codes (KVED) from their registration;
• Submit primary documents detailing the financial transaction.

'The income of a single tax payer is determined by the cash method — based on the date funds are received.' — Bohdan Yankiv

Given these changes, entrepreneurs must prepare for potential operational challenges, especially in the security services sector. Failure to comply with the new requirements may lead to serious sanctions, including the revocation of the single tax regime and the imposition of fines. This underscores the need for vigilance and responsibility from business owners during this transitional period.

These legislative amendments pose considerable challenges for Ukrainian entrepreneurs, particularly those operating in the security sector. The ban on providing security services for sole proprietors may lead to lost income and new tax liabilities, which could, in turn, affect the overall business climate in the country. Entrepreneurs must monitor legislative changes and adhere to the new rules to avoid serious financial repercussions.