VAT for individual entrepreneurs: what to expect?

Currently, the final decision on the introduction of VAT for individual entrepreneurs on the simplified taxation system has not been made. However, the most discussed option provides for a VAT payment threshold of UAH 4 million from January 1, 2027. What will change for business, analyzes the managing partner of the Law Company “DE-JURE”, Candidate of Law, attorney Gryhorii Tripulskyi.

This is not so much about the introduction of VAT for all individual entrepreneurs, but about changing the approach to large turnovers in the simplified system and counteracting the fragmentation of medium-sized businesses into individual entrepreneurs in order to minimize taxes.
The introduction of individual entrepreneurs and the simplified taxation system has indeed given many people the opportunity to open a small business in a legal legal field, saving money and time on accountants and visits to the tax office. If VAT is introduced for some individual entrepreneurs, this will certainly increase the administrative and tax burden.

First of all, the complexity of accounting will increase: entrepreneurs will have to work with tax invoices, keep VAT records and submit additional reports. For businesses working with the end consumer, this may lead to higher prices or lower margins.

Today, entrepreneurs should gradually prepare for the possible strengthening of tax control and the complication of administration:

• carefully monitor their annual turnover and income structure;
• gradually switch to more systematic accounting;
• if turnover is approaching the upper limits of the simplified system, it makes sense to review the business model.

Consult with lawyers and tax specialists on possible development scenarios and prepare your business for new conditions in advance.