EBA calls on the Government to engage business in finding VAT alternatives for sole proprietors to combat the shadow economy

21/ 04/ 2026

It has recently become known that the Ukrainian Government, in agreement with the IMF, will not currently proceed with the initiative to introduce VAT taxation for sole proprietors. Instead, it will seek alternative measures to secure budget revenues for 2027. The introduction of VAT for sole proprietors is not the only mechanism for tackling the shadow economy. Therefore, the business community of the European Business Association expresses its readiness to participate in identifying alternative solutions to combat informality and support budget revenues. In particular, compliant businesses hope that a fair solution will be found to address the abuse of the simplified taxation system. It is important that budget revenues are not secured by increasing the tax burden solely on transparent businesses. The Association’s experts recognise the importance of maintaining a simplified tax system. At the same time, they emphasise the need for its reform to prevent its misuse by large companies and networks through business fragmentation. Accordingly, we hope that the Government and Members of Parliament will continue working on solutions aimed at improving Ukraine’s economic health and countering illegal trade, smuggling, and tax evasion schemes. Combating the shadow economy is first and foremost in Ukraine’s national interest, and is not only a condition of cooperation with international financial institutions.

The introduction of VAT for sole proprietors is not the only mechanism for tackling the shadow economy. Therefore, the business community of the European Business Association expresses its readiness to participate in identifying alternative solutions to combat informality and support budget revenues.

In particular, compliant businesses hope that a fair solution will be found to address the abuse of the simplified taxation system. It is important that budget revenues are not secured by increasing the tax burden solely on transparent businesses.

The Association’s experts recognise the importance of maintaining a simplified tax system. At the same time, they emphasise the need for its reform to prevent its misuse by large companies and networks through business fragmentation.

Accordingly, we hope that the Government and Members of Parliament will continue working on solutions aimed at improving Ukraine’s economic health and countering illegal trade, smuggling, and tax evasion schemes.

Combating the shadow economy is first and foremost in Ukraine’s national interest, and is not only a condition of cooperation with international financial institutions.