Ukraine is considering adopting the Polish model for taxing sole proprietors
Following the end of martial law in Ukraine, there are plans to implement a large-scale reform of the simplified taxation system. The government is using the Polish model as a benchmark, which has already been incorporated into the National Revenue Strategy.
This was reported in an interview with SPEKA by Danylo Getmantsev, a member of parliament and chairman of the Verkhovna Rada’s Tax Committee.
The upcoming changes will involve a comprehensive overhaul of the operating conditions for private entrepreneurs. A key change will be a significant expansion of the financial thresholds for remaining in the simplified system—the annual income limit is planned to be raised to as much as 2 million euros, which significantly exceeds current Ukrainian limits. At the same time, instead of fixed rates, a differentiated tax system will be introduced, under which the tax rate will directly depend on the specific type of commercial activity and turnover. For example, for the retail sector, the rate could drop to 3% of income compared to the current 5% for the third group of sole proprietors, while for the service sector, the tax burden, on the contrary, could become higher.
According to the committee chair, the main goal of the reform is to restore the “simplified tax system” to its original function as a tool to support exclusively small businesses. Danylo Getmantsev emphasized that the current tax system is distorted, as medium and large companies are widely masquerading as small entrepreneurs to evade taxes and optimize payroll. The lawmaker assured that the new rules will not create critical problems for legitimate “white” small businesses, while business models built on the artificial fragmentation of large enterprises will be blocked.
A separate provision of the upcoming changes will be the elimination of discrepancies in the thresholds for registration as a value-added tax (VAT) payer. The deputy called the current practice flawed, noting that while the threshold for mandatory VAT registration under the general system is 1 million hryvnias, it reaches 8–10 million hryvnias under the simplified system, as this creates fertile ground for shadow schemes and the purchase of fictitious documents. The tax reform provides for the introduction of a single, unified VAT threshold for all business entities without exception—from individual entrepreneurs to large corporations and LLCs. At the same time, Danylo Getmantsev confirmed his previous promise: no radical tax changes for individual entrepreneurs will be implemented until the official end of the war.
The Verkhovna Rada postponed consideration of the bill on the introduction of VAT for sole proprietors in order to work with the IMF to develop a more balanced approach that will not harm small businesses during the war.
Prior to this, Ukraine and the IMF signed a memorandum on a 5% military levy for an indefinite period and VAT for sole proprietors.
