IMF Demands VAT for Ukraine's Sole Traders as Unified Tax Revenue Hits 60 Billion

2025 Tax Revenue from Ukrainian Sole Proprietors

According to Главком: In 2025, Ukrainian sole proprietors (FOPs) paid 59.88 billion hryvnias in unified tax, a 9% increase from 2024. The vast majority of this revenue, 80% or 47.84 billion hryvnias, came from Group 3 FOPs. The total number of active unified taxpayers in Ukraine reached 1.63 million, with nearly half-approximately 800,000-registered under Group 3. This simplified tax system is a cornerstone of Ukraine's small business sector, which has shown resilience during the war.

Tax Rates and Payment Trends

Group 3 FOPs pay a tax rate of 3% on income (with VAT) or 5% (without VAT). While their total tax payment rose by 6.5% in 2025, their numbers slightly declined from 801,500 at the end of 2024 to 798,300 by the end of 2025. Group 2 FOPs contributed 11.5 billion hryvnias, or 19% of the total, marking a 20% annual increase, with their taxpayer count growing by 4%. In contrast, Group 1 FOPs paid just 537 million hryvnias (less than 1% of total revenue), with both their tax sum and number of entrepreneurs falling by 15% and 19% respectively, to 165,700.

Group 4, which covers farm enterprises, paid 5.93 million hryvnias, more than doubling their tax contribution despite a decrease in the number of farmers from about 800 in 2024 to around 700 in 2025. Geographically, FOPs in Kyiv contributed the most, paying 13.2 billion hryvnias or 22% of the national total. This was followed by Lviv Oblast with 5.4 billion (9%) and Dnipropetrovsk Oblast with 5.2 billion (9%).

The International Monetary Fund (IMF) has made the introduction of mandatory Value-Added Tax (VAT) for FOPs under the simplified system a key condition for Ukraine's access to its loan program.

Other IMF requirements include reforming state-owned enterprises, continuing the overhaul of the State Customs Service, and broader tax system reform. The IMF head clarified that for the new program to be approved, the relevant draft law only needs to be submitted to parliament, not finally adopted.

The overall growth in unified tax revenue points to a degree of stability within Ukraine's sole proprietor sector. However, the decline in the number of Group 3 FOPs may signal underlying business challenges. The IMF's demand for mandatory VAT could significantly impact this category of entrepreneurs, requiring urgent government action to adapt to new conditions and ensure continued financial support. It is crucial that these changes do not place an excessive burden on small businesses, which remain a vital component of the Ukrainian economy.