VAT for Sole Proprietors in Ukraine: what has been passed, what changes in 2027 and what to expect in 2028

In brief: what changes and when

What the Verkhovna Rada passed on 11 November 2026

Bill No. 16037-д applies to those already registered as VAT payers. It does not introduce mandatory VAT registration for all FOPs on the simplified tax system. There are four key changes.

1. Quarterly VAT returns

Today, a FOP registered for VAT files a return every month, even with very few transactions. The new rules let the entrepreneur choose the reporting period: a month or a quarter. That means four returns a year instead of twelve.

Points to note:

• the switch is not automatic: an application must be filed 15 calendar days before the quarter begins;
• the reporting period can be changed no more than once a year;
• new VAT payers can choose a quarterly period in an application within 15 days of registration;
• the rule applies only to FOPs, not to legal entities;
• tax invoices must still be issued and registered on the usual deadlines, not once every three months.

There will be less reporting, but monthly VAT work does not go away.

2. The tax service will pre-fill returns

The State Tax Service will generate draft VAT returns and tax invoices using data already held in its electronic systems. Instead of re-entering figures by hand, the accountant will get a ready draft.

Automation does not remove responsibility, though. The data will still need to be checked against actual transactions and corrected. It is not yet clear how complete these drafts will be or how the system will handle discrepancies. The detailed procedure is to be approved by the Ministry of Finance.

3. Audit threshold raised to UAH 1 million

The threshold tied to a specific ground for an unscheduled documentary audit of VAT refunds and negative VAT balances is being raised from UAH 100,000 to UAH 1 million.

This is good news for business, but it does not mean amounts below a million will never be checked. Other grounds for audits remain in place.

4. Some tax invoice rules will change

Issuing consolidated tax invoices for prepayments on continuous or regular supplies to non-VAT payers becomes simpler. These provisions were revised before the second reading, so this is not a general permission to issue one invoice for all monthly sales, only for transactions expressly defined by law. It is worth reviewing how such transactions are documented once the final text is published.

When the new rules take effect

As of 12 November 2026, the law has been passed but still needs to be signed and officially published. Until then, the current rules apply.

• The day after publication: the main provisions take effect, including pre-filled reporting, the audit threshold and consolidated tax invoices.
• From 1 January 2027: FOPs who are VAT payers gain the right to choose a quarterly reporting period.
• During 2027: practical rollout is expected, through Ministry of Finance procedures and updates to the tax service's electronic systems.

The effective date does not guarantee that every service will work in full straight away. We will check the exact dates against the published law and update this article.

Open questions

How to switch to quarterly filing from the start of 2027? The application has to be filed 15 days before the quarter, which for Q1 means December 2026. But the rule itself only applies from 1 January 2027. Existing payers may in practice be able to switch only from Q2. Transitional provisions or tax service guidance should clarify this.

What happens to VAT payment deadlines? Entrepreneurs need to know not only how often to file, but also when to pay and how this links to invoice registration.

How well will pre-filling work? Especially with adjustments, returns of goods, advances, blocked tax invoices or errors in counterparties' data.

What about mandatory VAT for simplified-system taxpayers? The new law does not address this at all.

Why we expect changes in 2028

In our view, No. 16037-д should be seen not as a stand-alone simplification but as part of a wider tax reform.

Mandatory VAT for some FOPs has been debated for a long time. Initially the plan was 2027 with a turnover threshold of UAH 1 million, which drew heavy criticism from business. For a small entrepreneur, VAT means not just another tax but more complex bookkeeping, extra costs and repricing.

The timeline was later revised. The IMF's updated 2026 benchmarks say: adopt legislation removing the VAT registration exemption for relevant single-tax payers by the end of April 2027, and apply it from 1 January 2028.

In other words, the idea was postponed, not dropped. Bill No. 16037-д fits this logic well: first simpler reporting and electronic services, then a possible expansion of the VAT base.

This is our reading of the direction of travel, not a claim that mandatory VAT registration from 2028 has already been approved.

What the threshold for FOPs might be

In September 2026, Deputy Finance Minister Svitlana Vorobei said an agreement had been reached with international partners on a threshold of EUR 85,000 in annual turnover. That is over UAH 4 million depending on the exchange rate, and far higher than the original UAH 1 million.

There is no final decision yet. Lawmakers still need to set the threshold, the way turnover is calculated, when the registration obligation arises and the transitional rules. So EUR 85,000 is not yet a limit in the Tax Code. Equally, there are no grounds to say that every FOP will become a VAT payer regardless of turnover.

What this would mean for small businesses

If the reform is adopted, entrepreneurs above the threshold will take on new obligations: keeping VAT records, issuing and registering tax invoices, tracking liabilities and input VAT, and filing returns.

The impact will differ from business to business:

• Trade between VAT payers. If you buy from VAT payers and sell to other VAT payers, input VAT largely offsets the tax and prices for clients barely change.
• Services to consumers. If you have few VAT-able purchases and your clients are individuals, VAT will fall either on your price or on your margin.

That is why judging the reform by the 20% rate alone is misleading. What matters is the structure of income and costs, who your clients and suppliers are, pricing and the right to input VAT.

How to prepare now

We do not recommend rushing to change your tax system because of VAT headlines. But ignoring a possible reform is not wise either. What you can do now:

• calculate your annual turnover for 2025 and 2026 and compare it with the threshold under discussion;
• check how many of your suppliers are VAT payers and how many of your clients are not;
• estimate how 20% VAT would affect your prices and profit if registration became mandatory;
• put your source documents and inventory records in order;
• automate your bookkeeping so that switching to VAT does not become manual work.

This is especially relevant for businesses whose turnover is already approaching UAH 4 million a year.

Alfa Gold's conclusion

We see bill No. 16037-д as a positive step towards simpler VAT administration. But it does not settle the question of mandatory VAT for simplified-system taxpayers. On the contrary, given the IMF commitments and the sequence of changes, VAT registration for some FOPs from 2028 looks quite likely.

Our forecast: during 2027 the debate will move from "will there be VAT for FOPs?" to specifics. Who exactly will be affected, what turnover will be the threshold, what the transitional rules will be, and whether the state manages to make administration genuinely simple.

For small businesses, it matters that future changes take into account the real cost of accounting, the complexity of bookkeeping and the time needed to adapt. The key now is not to panic but to plan. The legislation may still change, but a prepared business will get through it with lower costs and risks.

Oleksandra Herasymenko
Founder of Alfa Gold accounting company

FAQ

Will VAT become mandatory for all FOPs in 2027?

No. Law No. 16037-д does not introduce mandatory VAT registration for single-tax FOPs. It only makes life easier for those who are already VAT payers.

From what year could mandatory VAT for FOPs be introduced?

Under the IMF benchmarks, the law should be adopted by the end of April 2027 and applied from 1 January 2028. There is no final decision yet.

What turnover threshold is being discussed?

In September 2026 the Ministry of Finance mentioned EUR 85,000 a year, which is over UAH 4 million. There is no such threshold in the Tax Code yet.

How can a FOP switch to quarterly VAT returns?

File an application 15 calendar days before the quarter begins. The period can be changed no more than once a year. The right applies from 1 January 2027.

Can tax invoices be registered once a quarter?

No. Only the return becomes quarterly. Tax invoices are issued and registered on the usual deadlines.

Want to know how possible VAT would affect your business? We will review your bookkeeping, model your tax burden under different scenarios and tell you what to prepare for. Get a consultation with Alfa Gold.

Sources

• Bill No. 16037-д, Verkhovna Rada of Ukraine
• Ministry of Finance: simplifying VAT administration, 11.11.2026
• IMF: Ukraine country report, 2026, No. 188, tax reform timeline
• Interfax-Ukraine: Ministry of Finance on the EUR 85,000 threshold

Prepared as of 12 November 2026. Effective dates and conditions will be confirmed once the law is signed and officially published.