Наталя Хандусенко Money 16 January 2026, 16:44

Introducing VAT for sole proprietors with annual turnover of over UAH 1 million could lead to the closure or shadowing of small entrepreneurs, warns BRDO and offers its own option

The Office of Effective Regulation (BRDO) believes that the government's current plan to introduce VAT for sole proprietors with a threshold of UAH 1 million could lead to the closure or shadowing of a quarter of small entrepreneurs in the service sector. Instead, they propose implementing a European approach.

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Introducing VAT for sole proprietors with annual turnover of over UAH 1 million could lead to the closure or shadowing of small entrepreneurs, warns BRDO and offers its own option

The Office of Effective Regulation (BRDO) believes that the government's current plan to introduce VAT for sole proprietors with a threshold of UAH 1 million could lead to the closure or shadowing of a quarter of small entrepreneurs in the service sector. Instead, they propose implementing a European approach.

“We support fiscal justice, which the IMF insists on. However, the path to it should not lie through the destruction of small businesses, especially in extremely difficult conditions of war and power outages. Ukraine aspires to the EU, so we must introduce VAT according to European rules. This means a registration threshold of 85,000 euros (about 3.8 million UAH), and not 23,000 euros, as is currently proposed. VAT should become a tool for controlling large schemes, and not a burden for self-employed Ukrainians,” emphasized Oleksiy Dorohan, Executive Director of the Office of Effective Regulation BRDO.

What BRDO offers:

Raise the VAT registration threshold for all entrepreneurs, regardless of the taxation system, to the maximum level provided for EU member states (€85,000).
Equalize the VAT threshold in stages: first increase it for the general system, then restore taxpayers' trust in the tax authorities, develop a simplified VAT administration system for small businesses — and only then change the registration threshold for "simplified" businesses after the end of martial law with a sufficient transition period and initially with lower VAT rates.
Simplify VAT administration for all businesses.
Focus on combating VAT evasion schemes through the implementation of EU VAT Directive approaches.
Implement digital analytical tools for risk-based control.

Recall that within the framework of the agreement reached with the IMF on the allocation of expanded financing, the Government of Ukraine undertook to expand the tax base, in particular, by canceling the preferential exemption from registration for VAT payers. The draft Law prepared by the Ministry of Finance of Ukraine proposes to achieve these goals by equalizing the registration threshold at UAH 1 million for both payers on the general and simplified taxation systems.

However, the public is opposing this initiative of the Ministry of Finance. For example, an electronic petition has been registered on the Government Portal, asking to postpone the introduction of VAT for individual entrepreneurs with an annual turnover exceeding UAH 1 million. To date, the petition has collected almost 19,000 signatures.

The Minister of Economy promised to finalize the draft law on VAT for individual entrepreneurs, which "causes tension in business"

"This initiative cannot be sped up or postponed, it must be stopped." Artem Borodatyuk criticized the Ministry of Finance's idea regarding VAT for individual entrepreneurs