Lesya Karnaukh, Acting Head of the State Tax Service (STS), denied claims that the International Monetary Fund (IMF) has demanded the introduction of a universal Value-Added Tax (VAT) for all individual entrepreneurs. This was reported by Dengi.ua, with a link to her recent interview.
According to Karnaukh, international partners are focused on the modernization of the simplified tax system and the broadening of the tax base rather than total VAT imposition.
What is Actually Stipulated in the IMF Memorandum
Karnaukh emphasized that while the STS is involved in cooperation with the IMF regarding tax administration improvements, the discourse surrounding "VAT for FOPs" is often misinterpreted.
"From the inside, the focus is slightly different. During our consultations with the Ministry of Finance or the Head of Government, we always discuss the modernization of the simplified tax regime. The IMF memorandum does not state: 'introduce universal VAT for FOPs.' Such a requirement does not exist," Karnaukh explained.
IMF’s Vision for Ukraine’s Tax Policy
The tax policy advocated by the Ministry of Finance, the government, and the STS is centered on two fundamental principles:
- Moderate tax rates;
- A broadened tax base.
"Our rates are weighted averages. We do not have excessively high rates across all taxes. If we compare them with the EU countries—our destination—our rates are competitive. In some countries, VAT is 22%, in others 18%, depending on economic conditions and the tax object," stated the Acting Head of the STS.
She added that the IMF expects Ukraine to provide an expanded tax base, moderate rates, and a transparent system for identifying taxpayers.
Preparing for Administrative Reforms
Regardless of whether VAT requirements for FOPs change in the future, the tax authorities are already working to streamline administration. Karnaukh shared details of an internal exercise: she tasked departments with interviewing practicing accountants to identify bottlenecks in current processes.
"We asked them what works, what doesn't, and how much time they spend on specific tasks. We mapped the entire VAT administration process from inception to reporting and payment. This allowed us to identify problems that can be solved immediately," said Karnaukh.
She noted that many administrative hurdles can be resolved quickly through such feedback loops.
