Extending the VAT threshold to the simplified system means that 2026 should be used by the state for systematic explanatory work with businesses and parallel improvement of VAT administration. Without clear rules, simple procedures and a reduction in administrative disruptions, such a change will not fulfil its logic and will not be perceived as fair by businesses.
Ukraine is no longer implementing the old IMF program. There are high risks of delays in starting a new IMF program, as several previous measures are at risk of not being implemented.
Failure to meet the indicators of the Ukraine Plan for Q4 2025 could cost Ukraine more than €2.3 billion in lost funds, and in total, by the end of 2025, the volume of unmet indicators could cost more than €3.6 billion in lost financial support. It is important to note that the vast majority of these indicators are legislative initiatives, the adoption of which falls within the remit of the Verkhovna Rada of Ukraine, which underscores the importance of restoring the parliament’s responsibility for ensuring Ukraine’s full access to financing under the Ukraine Facility.
IMF
Parliament approved the 2026 State Budget Law – a prior action for the new IMF program
Loans and grants from international partners are planned in the amount of approximately USD 50 bn
The new IMF program is an anchor for accumulating future aid from foreign partners
An important source of funding, as expected, should have been the Reparation Loan from the EU (effectively at the expense of immobilised Russian assets): the EU has now decided to lend Ukraine EUR 90 bn (which are to be borrowed by the EU at capital market)
Ukraine continues to fail to meet its benchmarks
Unmet benchmarks:
- repeal of the “Lozovoy amendments” (55), which is opposed by the business community
- review of the process of selecting and appointing members of supervisory boards of state-owned enterprises (57)
- Appoint a permanent head of the State Customs Service (43)
- Introduction of European and international property valuation standards in agreement with the IMF (53)
Another benchmark is also unlikely to be fulfilled:
Adoption of sectoral plans in accordance with the reformed public investment management system (48)
New IMF program: high risks for the launch of a new program
- Submission of a draft law on VAT for individual entrepreneurs under the simplified taxation system (prior action): the text of the draft law has already been submitted for public discussion (see slides 131-140). It will be easier to submit the draft law in January (prior action) than to adopt it in the spring (most likely it will be a structural benchmark).
- Adoption of the law on taxation of digital platforms (No. 14025), according to which digital platforms will become tax agents: the draft law has not yet been approved even in the first reading.
- Taxation of all international parcels (not just those worth EUR 150 or more): the relevant bill has not yet been registered. Perhaps the relevant provisions will be added to Draft law No.14025 before the second reading.
EU
- On December 22, the sixth tranche of €2.3 billion under the Ukraine Facility (for the fulfilment of eight indicators for Q3 2025 and one indicator for Q1 2025).
- Failure to meet the indicators for Q4 2025 could cost Ukraine more than €2.3 billion in lost funds. In total, Ukraine failed to meet indicators worth more than €3.6 billion in 2025.
- On December 2, the Ministry of Economy, as the National Coordinator of the Ukraine Facility, held its third meeting with the Audit Board and presented its first report with recommendations on strengthening transparency, internal control, audit and risk management in the use of EU funds.
- On December 18, during the EU summit, a decision was made to provide Ukraine with €90 billion in loans in 2026-2027.
Спеціальна тема випуску — «Does the IMF want to “kill” Ukrainian individual entrepreneurs?»
Appropriate next steps:
- Make effective use of 2026 for preparation and communication
No sudden decisions. Explain the logic behind business changes to citizens before they are implemented. - Make administration as simple and predictable as possible
Minimum of complex procedures, emphasis on convenience and clear rules. - Combine the closure of schemes with tangible relief for “white” businesses
The elimination of abuse should be accompanied by better working conditions for those who operate transparently. - Take a flexible approach to thresholds and limits
Registration thresholds and simplified limits should correspond to the actual administrative burden and not encourage fragmentation. - Adapt VAT rules to the scale of small businesses
In particular, consider the cash method for simplified taxation as a way to reduce pressure on working capital.
You can view the previous monitors on the website RRR4U
The monitoring was prepared with the support of the International Renaissance Foundation.
RRR4U (Resilience, Reconstruction and Relief for Ukraine) is a consortium of four Ukrainian civil society organisations: Centre for Economic Strategy, Institute for Economic Research and Policy Consulting, Institute of Analytics and Advocacy and DiXi Group.