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The IMF has postponed the introduction of VAT for sole traders until 2028: what will change

The IMF has postponed the introduction of VAT for sole traders until 2028: what will change

22 July 2026, 17:32

The IMF has postponed the introduction of VAT for sole traders until 2028: what will change — The new rules will come into force on 1 January 2028

The International Monetary Fund has agreed to postpone the introduction of value added tax (VAT) for sole traders operating under the simplified tax system. Instead of January 2027, the new rules are due to come into force on 1 January 2028.

This is set out in the updated memorandum between Ukraine and the IMF.

What the IMF has decided

According to the document:

the introduction of VAT for sole traders has been postponed by one year — until January 2028;
the Verkhovna Rada is to pass the relevant law by the end of April 2027;
this requirement remains one of the structural benchmarks of Ukraine’s cooperation programme with the IMF.

What will change for sole traders from 1 January 2028

Ukraine has confirmed its intention to:

abolish the VAT exemption for taxpayers under the simplified tax system;
to broaden the tax base;
reform the current system in line with agreements with the IMF.

At the same time, the Ukrainian authorities have acknowledged that passing such legislation during the war remains politically challenging.

What further measures should Ukraine prepare?

By the end of 2026, the government must develop mechanisms to combat tax abuse.

In particular, these will address:

the artificial fragmentation of businesses to retain eligibility for the simplified tax system;
switching between the simplified and general tax systems solely to minimise tax liability;
the use of sole traders to conceal employment relationships and evade personal income tax and social security contributions.

Why the IMF is demanding this

The Fund believes that abolishing the VAT exemption will:

increase state budget revenue;
broaden the tax base;
reduce the scale of the shadow economy;
reduce the payment of ‘envelope’ wages;
make smuggling less attractive.

According to IMF estimates, the direct effect of broadening the VAT base alone could amount to around 0.4% of GDP, whilst the indirect effect could be even greater thanks to the de-shadowing of the economy.

It should be noted that the introduction of VAT for sole traders is one of Ukraine’s commitments under the Extended Fund Facility (EFF) programme. It was previously envisaged that the new rules would come into force on 1 January 2027, but the IMF has now agreed for the second time to postpone the reform at the request of the Ukrainian side.

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