Upcoming IMF Mission for Ukraine's EFF Program Review
A mission from the International Monetary Fund (IMF) is set to begin work on the first review of Ukraine's Extended Fund Facility (EFF) program in late May 2023. A key topic under discussion had been the introduction of a value-added tax (VAT) for individual entrepreneurs (known as FOPs), but this issue has now been taken off the table. National Bank of Ukraine Governor Andriy Pyshnyy made the announcement during a press briefing.
Negotiations and the New EFF Framework
Following talks held in Washington, D.C., from November 17 to 21, 2025, Ukrainian officials and the IMF reached a staff-level agreement on a new 48-month EFF program. Ukraine's Ministry of Finance had proposed a draft law requiring individual entrepreneurs with annual revenues exceeding 1 million Ukrainian hryvnias to register as VAT payers. In response, the Ukrainian side suggested raising that threshold to between 2 and 4 million hryvnias.
Prime Minister Yuliia Svyrydenko stated that the IMF agreed to remove the VAT requirement for individual entrepreneurs from its list of conditions. Andriy Pyshnyy commented on the development, noting:
“The Ukrainian delegation returned with the understanding that the VAT issue for individual entrepreneurs has been postponed. Further discussions will continue within the framework of the IMF mission, which we expect to begin in the last ten days of May.” - Andriy Pyshnyy
As a result, Ukraine is advocating for a focus on reducing the shadow economy rather than increasing the tax burden on small businesses. This approach aims to support the growth of small enterprises amid economic challenges and promote stability in the country's entrepreneurial landscape.
The decision to hold off on implementing VAT for individual entrepreneurs is seen as a positive move for small business support, especially during a period of economic uncertainty. By prioritizing efforts to bring businesses into the legal fold, the strategy could lead to higher tax revenues over time. This outcome may foster a more favorable environment for entrepreneurship in Ukraine.
The recent decision by the IMF to exclude the VAT requirement for individual entrepreneurs marks a significant policy shift that could have far-reaching implications for Ukraine's small business sector. This move aligns with the ongoing discussions about enhancing the economic environment for sole traders, emphasizing the importance of reducing financial burdens. For a deeper understanding of this crucial development and its potential effects, you can read more about the policy changes affecting Ukrainian sole traders.