The Union of Ukrainian Entrepreneurs does not support most of the proposed tax changes that significantly affect business conditions. In the context of a full-scale war, regular shelling, prolonged power outages, and unstable logistics, Ukrainian businesses are already operating at the limit of what is possible. Additional fiscal and administrative pressure on transparent businesses at such a time is a blow to those who pay taxes, create jobs, and sustain the country’s economy.
The draft law formally complies with IMF and EU requirements; however, in its current version, it risks shifting an excessive burden onto small businesses and citizens without addressing the systemic problems of the shadow economy. Below are our key positions on each of the proposed blocks of changes.
The Union does not support the initiative to make VAT mandatory for sole proprietors.
We consider this decision premature and economically disadvantageous. Administrative costs of maintaining VAT accounting for one sole proprietor amount to at least UAH 93,000 per year. For approximately 300,000 entrepreneurs affected by this provision, this exceeds UAH 22 billion in annual costs, which significantly surpasses the projected fiscal effect. At the same time, the current VAT administration system remains risky: in 2023, the NACP identified corruption risks in the system of suspending the registration of tax invoices, and the results of the presidential audit have still not been published. Expanding the VAT system without eliminating these risks means knowingly exposing small businesses to pressure from fiscal authorities.
The Union does not object to the need to harmonize customs legislation with EU norms in the field of e-commerce. At the same time, the introduction of VAT on all international parcels and lowering the threshold of 150 euros is premature and does not take into account the actual state of infrastructure. In particular, the Customs Service of Ukraine currently processes about 90 million parcels per year. Removing the 150-euro threshold without appropriate infrastructure, IT systems, and personnel will lead not to increased revenues but to the collapse of customs clearance and an increase in corruption risks. Also, if we look at EU practice, since 2021 the IOSS (Import One-Stop Shop) system has been in operation there, allowing platforms and sellers to pay VAT centrally without burdening each checkpoint. The implementation of a similar approach in Ukraine requires separate technical, legal, and personnel preparation.
The Union supports the introduction of transparent reporting for digital platforms.
At the same time, the proposed model significantly deviates from the European DAC7 standard and is much stricter. The EU DAC7 Directive (implemented since 2023) obliges platforms only to collect and transmit information about users’ income to tax authorities. The function of administering and withholding taxes remains with the taxpayer. The draft law proposes to turn platforms into full-fledged tax agents with withholding and remittance of taxes, and such a model does not exist in any EU country. The penalties предусмотрені by the draft law are disproportionate and risk forcing international platforms to limit or suspend their operations in Ukraine.
Companies that are members of the Union paid UAH 339 billion to the budget in 2025 and continue to support the country’s defense capability. We understand the need for wartime financing and do not object to maintaining the military levy. At the same time, we insist on two fundamental conditions. Increasing the levy for sole proprietors of groups I, II, and IV requires separate justification. According to estimates by Case Ukraine, annual budget losses from shadow activity are: smuggling (UAH 380–540 billion), “envelope” wages (UAH 230–460 billion), conversion centers (UAH 310 billion), and tax evasion (UAH 100 billion). These amounts are many times greater than the potential effect of taxing microbusiness. The fiscal burden cannot increase for those who pay while those who do not pay remain outside the state’s attention. The levy must have clear deadlines or conditions for termination. Turning a temporary wartime levy into a permanent one without transparent logic undermines predictability for business and reduces trust in the fiscal system.
Expanding the right of tax authorities to request information on all accounts of an individual without clear legal grounds and judicial control creates a risk of abuse and pressure on business. The proposed mechanism undermines trust in the banking system and contradicts the principles of financial confidentiality adhered to by most EU countries. The current mechanism for disclosure of bank secrecy by court decision is a sufficient and proportionate tool.
SUP Suggestions
The Union calls for the launch of discussions of the proposed changes with the business community and proposes:
- to remove, until the end of martial law, the issue of additional fiscal pressure on the simplified taxation system;
- to jointly develop with business separate draft laws on the abolition of tax exemptions for international parcels and the taxation of income received from digital platforms;
- to consider the feasibility of continuing the payment of the military levy by microbusiness, taking into account systemic budget losses from smuggling and other tax evasion schemes.
We are open to dialogue with the Ministry of Finance and are ready to work together on measures that will truly fill the budget and take into account the proposals of Ukrainian business.