The European Union is considering the possibility of strengthening the conditions for providing financial assistance to Ukraine — in particular, making part of the payments dependent on the introduction of VAT for businesses on a simplified taxation system.
The European Union is considering the possibility of strengthening the conditions for providing financial assistance to Ukraine — in particular, making part of the payments dependent on the introduction of VAT for businesses on a simplified taxation system.
This was reported by Bloomberg, citing anonymous sources familiar with the negotiations.
At stake is €8.4 billion in macro-financial assistance that the EU plans to provide this year as part of a total €90 billion package. A specific proposal is to introduce a 20% VAT rate for companies on the simplified system with annual revenues exceeding UAH 4 million. According to the Ministry of Finance, this would bring the budget over UAH 40 billion annually.
This requirement actually coincides with what has been discussed for several months within the framework of the IMF program for $8 billion. Ukraine is trying to convince the Fund to at least postpone this requirement — the March deadline has already been missed, the next one is in June, when the next review of the program will take place. The IMF has so far disbursed $1.5 billion, the next tranche of $700 million is in question.
The problem is that the draft law on VAT for individual entrepreneurs has no votes in parliament — the Rada has already openly ignored the president’s demands on the issue earlier this year. The president’s office, in turn, has accused the Finance Ministry of being too accommodating to the IMF.
Bloomberg notes that even if Ukraine manages to buy time now, tax system reform will still have to be carried out as part of negotiations on joining the EU.
Recall that on March 30, the Cabinet of Ministers adopted three draft laws concerning amendments to the Tax Code, namely: taxation of parcels up to 150 euros; introduction of a 5% military levy for all time; and taxation of digital platforms. However, the draft law on VAT for individual entrepreneurs was not included in this package.
It was previously reported that the IMF wants the Verkhovna Rada to introduce VAT for individual entrepreneurs by the end of March.
Prime Minister Yulia Svyrydenko, in turn, stated that «the IMF understood the sensitivity of the issue of introducing VAT taxation for individual entrepreneurs — both for society and for parliament.»
