The Ukrainian government and the International Monetary Fund outline a shift away from the simplified tax system
A memorandum released by Ukraine’s Ministry of Finance in collaboration with the International Monetary Fund details a move that will reshape the country’s tax landscape. The document confirms that, as of July 1, 2023, Ukraine has ended the simplified taxation regime for individual taxpayers and small businesses. This regime, commonly known as a single tax, had set a uniform two percent rate for eligible taxpayers. The memorandum explains that a legislative bill is planned to be submitted to parliament to abolish these simplified provisions and to restore the pre-war tax framework for those taxpayers who previously used the simplified system.
The memorandum does not stop at the simplification regime. It also notes a second package of proposed measures. A bill is expected to be introduced in parliament that would reinstate the standard tax audit approach for small entrepreneurs. In addition, a separate program aimed at promoting the use of cash registers is described, signaling a broader effort to improve tax administration and compliance across the economy.
Officials emphasize that these steps are framed by an assessment of the current economic environment and the state budget. The authorities point to a challenging fiscal situation and a significant budget deficit as key drivers for pursuing changes in taxation and auditing practices. The goal, as stated in the memorandum, is to align revenue collection with wartime and postwar economic realities while preserving the ability of the state to finance essential services and public programs.
Context is provided by noting that Ukraine’s public debt has risen markedly over the past years. Since February 2022, debt levels have increased by about 45 percent, bringing the debt burden closer to 80 percent of the country’s gross domestic product. This financial backdrop reinforces the rationale for revisiting tax policy and enforcement mechanisms, with the aim of strengthening fiscal resilience without compromising the overall business climate or the capacity of the state to support recovery initiatives.
Analysts and observers may look to the forthcoming parliamentary bills to understand the precise design of the new tax framework, the scope of audits for entrepreneurs, and the specifics of the cash register program. While the information released emphasizes the necessity of reform in light of current pressures, it also signals a longer-term plan to modernize tax administration, improve transparency, and restore orderly tax relations that align with international standards and the expectations of international financial partners. The changes are expected to affect small businesses, sole proprietors, and individuals who previously benefited from the simplified tax regime, and to initiate a transition toward a more conventional taxation structure that the government believes will support economic stability and growth under evolving fiscal conditions.