Ukraine and IMF Agree to Raise VAT Threshold for Small Businesses.

Agreement Between Ukraine and the IMF

According to TSN.ua: Ukraine and the International Monetary Fund (IMF) have reached an agreement to increase the value-added tax (VAT) registration threshold for individual entrepreneurs (FOPs) to 4 million hryvnias, which is approximately 85,000 euros. This change will not affect two-thirds of all FOPs in the country. The program under which this agreement was reached will be considered at the upcoming meeting of the IMF's Executive Board. This reform is part of broader efforts to simplify the tax burden on small businesses during a challenging economic period.

Negotiations between Ukraine and the IMF took place from November 17 to 21. The new 48-month Extended Fund Facility (EFF) program stipulates the fulfillment of 16 structural benchmarks and four prior actions. Minister of Economy Yulia Svyrydenko noted:

'Following numerous discussions and consultations, the mission has simplified the agreements.' — Yulia Svyrydenko

She also emphasized the importance of these changes, stating: 'The details here are important. In our work with the IMF, we agreed to raise the VAT registration threshold for FOPs to 4 million hryvnias.'

Plans from the Ministry of Finance

Furthermore, in December 2025, the Ministry of Finance plans to put forward for public discussion a draft law on mandatory VAT payment for FOPs with an annual income exceeding 1 million hryvnias. Yulia Svyrydenko added:

'There has been much discussion on how this will be done. We are working with parliamentarians and, most likely, will adopt these measures as part of a consolidated tax bill.' — Yulia Svyrydenko

Thus, the changes to VAT legislation for FOPs could significantly impact the business environment in Ukraine, though their implementation requires detailed discussion and coordination with all stakeholders.

The agreement between Ukraine and the IMF to raise the VAT threshold is a key step in reforming the tax system, which could provide greater support for small businesses amid economic instability. Raising the threshold will allow many entrepreneurs to avoid additional financial obligations, which may in turn stimulate entrepreneurial activity and overall economic growth. However, subsequent steps regarding mandatory VAT payment for a larger group of FOPs may spark new debates and require careful planning by the government and the business community.