Nut tightening to the limit: Ukrainians are preparing for a tax shock from 2026.

Ukraine may witness the sharpest financial crisis since the full-scale war, which will begin in 2026. The state budget deficit, which will amount to nearly 20% of GDP in 2025, will not be fully covered by external support. According to IMF forecasts, international partners will provide only about 11 billion dollars of the needed 24 billion.

The Ukrainian government is forced to search for internal sources of revenue and implement reforms in the tax system. The national revenue strategy for 2030 was adopted at the end of 2023, which envisions abandoning external financial support. The government plans to obtain an additional 420-450 billion hryvnias from de-shadowing. The first steps within the framework of the National Strategy were taken in 2024, such as the automation of transfer pricing and the creation of a tax risk management system.

Other reform areas include taxation of digital platforms, a simplified tax system, legalization of 'shadow' salaries, and staff changes in financial and control bodies. It is projected that revenues from de-shadowing will exceed 4 billion dollars in 2025. However, the level of the shadow economy remains a problem.

Ukraine is also considering the possibility of revising the VAT rate to increase budget revenues. However, in addition, the authorities must focus on other ways of raising funds, as the financial stability of the state will be under threat from 2026.

Analysis:

The necessity of reforming the tax system and dependence on external assistance pose serious financial challenges to Ukraine. The projected budget deficit and limited support from external partners reinforce the need to search for internal sources of revenue and implement reforms. However, the successful implementation of these measures could ensure the financial stability of the country and reduce dependence on external assistance. This could contribute to economic growth and improve the socio-economic situation of citizens.