Ukraine is preparing for the reform of the simplified taxation system (STS) . The Ministry of Finance confirmed that entrepreneurs should expect tax increases and increased control . This is stated in the Ministry of Finance's Report on the Implementation of the National Revenue Strategy in 2024 .
The reform is expected to start after a number of conditions are met , including the introduction of measures to control the financial transactions of entrepreneurs.
What will change for business?
According to the National Revenue Strategy , the following main innovations are envisaged:
1. The third group of SSO for legal entities
- Over the course of three years, the single tax rate for legal entities will gradually increase to 18% (regular income tax).
- After that, legal entities will not be able to operate under the simplified system.
2. Combining the second and third groups for sole proprietors
- Introduction differentiated income tax rates:
- The minimum rate is 3% for trading activities.
- The maximum is 17% for a number of services.
3. Review of the first group of sole proprietors
- Reducing the list of activities that can use the first group.
- Introducing a tax on actual income instead of a fixed fee.
4. Mandatory cash registers (PRO)
- All sole proprietors of the combined second group must use cash registers (PCRs or software PCRs).
5. Changes for agribusiness
- Farmers (individual entrepreneurs) will remain in the fourth group of the SSO , but the tax base will be expanded.
- will increase to 18% within three years
6. Strengthening tax control
- of doing business without mandatory accounting and documentary confirmation of the origin of goods is abolished .
There are more individual entrepreneurs, but they collect even more taxes
Despite the challenges for entrepreneurs, the number of sole proprietors working under the simplified system is growing.
– As of January 1, 2025, 1.63 million individual entrepreneurs were registered in Ukraine , which is 52.5 thousand more than in 2024.
– The largest number of individual entrepreneurs is in the third group – 800.2 thousand people (49.2%).
– Total tax revenues from individual entrepreneurs in 2024 increased by UAH 17.1 billion and amounted to UAH 55.1 billion .
What does this mean for entrepreneurs?
– The second and third groups will be combined , which may affect the amount of taxes for small businesses.
– For legal entities, the simplified system will virtually disappear , forcing them to switch to the general taxation system.
– Increased control over income and expenses will make it more difficult to do business without careful documentary accounting.
– Small entrepreneurs will have to switch to cash registers , which will increase their costs.
When to expect changes?
The reform will begin after key conditions are met , including the implementation of a system for controlling the circulation of funds in banks. The changes are expected to come into effect in 2026 .
The authorities justify the reform by the need to increase tax revenues and combat shadow business. However, for many individual entrepreneurs, these changes may mean a significant increase in the tax burden .
