The National Association of Lobbyists of Ukraine (NALU) has developed an alternative bill on the introduction of value added tax for individual entrepreneurs. As reported to Interfax-Ukraine by the NALU, the initiative was prepared by NALU Chairman Alexei Shevchuk, Deputy Chairwoman of the Board of Trustees Lyudmila Kozhura, and NALU Development Director and member of the Taxpayers Association Nazarii Valyansky.
“The purpose of the alternative bill is to protect small and medium-sized businesses in the context of martial law and post-war recovery, while gradually adapting Ukraine’s tax system to the requirements and standards of the European Union,” the association said.
The NALU noted that, unlike the government’s approach, which currently shifts the tax burden onto small businesses, the NALU’s alternative bill “offers a balanced solution that takes into account economic realities, security risks, and the institutional weakness of businesses during a crisis.”
The NALU cites the protection of small and microbusinesses in wartime as one of the key advantages of its alternative bill compared to the government’s version.
“The bill introduces temporary moratoriums on expanding the circle of VAT payers, increasing tax rates, and changing the limit for mandatory VAT registration for the entire period of martial law and until the end of the year after its termination,” the NALU noted.
In addition, the NALU cited the flexible VAT registration limit as an advantage of its bill, taking into account the economy and proposing, instead of a fixed limit of UAH 1 million, to link the VAT registration threshold to the minimum wage, which allows for automatic adjustment for inflation, changes in GDP, and macroeconomic dynamics.
The NALU also cited the gradual harmonization with EU law “without shocks to business” as one of the advantages of its bill:
the alternative draft provides for a gradual approach to the European VAT threshold (around €85,000) by 2031, avoiding administrative and financial pressure on entrepreneurs in crisis conditions.
In addition, the NALU noted that their bill provides for the preservation of a simplified taxation system, i.e.
it does not introduce mandatory VAT registration for single tax payers in the third group, preserving the simplified accounting and reporting system as the foundation for the development of small businesses.
Another advantage of the bill, according to the NALU, is the encouragement of voluntary VAT registration and the fight against abuse.
“A ‘carrot and stick’ model is being introduced: incentives for voluntary registration by VAT payers through the differentiation of single tax rates, as well as clear mechanisms to combat abuse, in particular the practice of so-called ‘salaried sole proprietorships’,” the association noted.
The NALU bill also provides for the protection of businesses in frontline and war-affected regions
by introducing special guarantees for businesses operating in areas where hostilities are ongoing or have taken place. In particular, the draft law provides for a moratorium on unscheduled tax audits of such taxpayers, which will reduce administrative and fiscal pressure and preserve business activity and jobs in conditions of increased security risks.
The NALU notes that “the proposed approach allows for the reconciliation of the fiscal interests of the state, Ukraine’s European integration commitments, and the real capabilities of small and medium-sized businesses, which remain a key pillar of the country’s economy today.”
