Recently, the topic “all FOPs on the simplified system will be forced to pay VAT” has been discussed again in entrepreneurial communities and social networks. Additional excitement was added by the fact that on December 18, 2025, the Ministry of Finance published a draft law regarding VAT for single tax payers.
Let’s calmly figure out what is already official, what is currently only a plan, and what FOPs should expect in the coming years.
What Is Important to Know Now
As of the end of 2025, the situation is as follows:
- The Ministry of Finance has indeed prepared and submitted for public discussion a draft law on the mandatory registration of single tax payers as VAT payers.
- The draft was developed with a view to launching new rules from January 1, 2027.
- At this moment, this is not yet a valid law, but only a proposal that must be considered, finalized, and voted on in the Verkhovna Rada.
- In 2025–2026, the rules for Group 1–3 FOPs regarding VAT do not change – simplifiers, as before, enjoy the privilege and are not obliged to become VAT payers, even if they exceed an income of UAH 1 million.
That is, for now, this is an announced direction of reform, and not “everyone transferred to VAT tomorrow.”
Why the Idea of VAT for Simplifiers Appeared at All
Ukraine is gradually aligning its tax system with European approaches and fulfilling obligations to international partners. The National Revenue Strategy until 2030 provides for:
- gradual reduction of tax benefits for the simplified system;
- expansion of the VAT tax base;
- fighting situations where large or “almost large” businesses operate through FOPs on the simplified system without VAT.
It is in this context that the idea appears: if a simplifier exceeds a certain turnover volume, they must work according to the general VAT rules, like other business entities.
What the Ministry of Finance Draft Law Proposes
The Ministry of Finance published a draft law with a long technical name on amendments to the Tax Code regarding the registration of single tax payers as VAT payers. In essence, it is about the following.
The proposed norms apply to:
- FOPs of groups 1, 2, and 3 on the single tax;
- legal entities – payers of the single tax.
The draft law “pulls” simplifiers to the general rules: if over the last 12 months the volume of taxable operations for the supply of goods or services exceeded UAH 1 million (excluding VAT), an obligation arises to register as a VAT payer.
Important point: the calculation includes not only “classic” sales but also online activity – sales through websites, mobile applications, marketplaces, etc.
If maximally simple:
- it is proposed to remove the exception from the Tax Code norms for single tax payers of groups 1–3 regarding mandatory VAT registration when exceeding the threshold of UAH 1 million;
- a separate norm establishes that for simplifiers of groups 1–3, the general VAT threshold applies on the same conditions as for other payers;
- for group 3, the use of rates of 5% (without VAT) and 3% (with VAT) and the transition procedure if the entrepreneur received the status of a VAT payer are clarified.
For FOPs falling under mandatory VAT registration, additional requirements appear:
- introduction of more detailed accounting of income and expenses in the prescribed form;
- regular submission of VAT reporting and tax payment according to all rules, as for other payers.
That is, the simplified system remains, but the level of formalization and accounting for part of FOPs will increase significantly.
When New Rules Might Start Operating
According to the logic arising from the explanatory materials to the draft law and Ukraine’s financial obligations:
- End of 2025 – the draft law was submitted for discussion;
- 2026 – submission to parliament, consideration, and voting are expected;
- January 1, 2027 – the date from which they plan to put the new rules into effect (if the law is adopted and signed).
That is, even under an optimistic scenario for the state, entrepreneurs have at least a year to prepare.
What VAT Rules Apply to FOPs Now (2025–2026)
To understand the scale of changes, it is important to fix the starting point.
Currently:
- There is a general rule in the Tax Code: when exceeding UAH 1 million of taxable turnover in 12 months, a business entity must register as a VAT payer.
- Single tax payers of groups 1–3 have a special privilege – this requirement does not apply to them now.
- FOPs of groups 1 and 2 do not register as VAT payers at all while the current version of the code is in effect.
- FOPs of group 3 can work:
- either at a rate of 5% without VAT;
- or at a rate of 3% + VAT, if they voluntarily decide to register as a VAT payer or are obliged to do so on general grounds.
And most importantly: exceeding an income of over UAH 1 million by a FOP of group 1–3 in itself does not yet create an obligation to become a VAT payer until the law is changed.
What This Means for FOPs in Practice
Today the situation looks like this:
- In 2025–2026, FOPs of groups 1–3 work according to already familiar rules – no “new VAT” specifically for simplifiers has been introduced.
- FOPs of groups 1–2, as before, do not become VAT payers.
- FOPs of group 3 can independently decide whether to work with VAT (3% + VAT) or without it (5%), based on the structure of their clients and expenses.
How to Prepare for Possible Changes Without Panic
A rational strategy for an entrepreneur now is not to be nervous, but to plan:
- Follow the fate of the draft law
Subscribe to news from the Ministry of Finance, the State Tax Service, and specialized accounting resources – so as not to miss the moment when the project is submitted to the Rada and in what form it is adopted. - Analyze your turnover
If you are steadily approaching UAH 1 million per year or exceeding this amount, it is worth calculating in advance how a possible transition to VAT will affect prices, cost, and profit. - Review the model of working with clients
For those who work mainly with large companies, VAT is often not a problem – on the contrary, it is even more convenient for counterparties. Perhaps a voluntary transition to VAT even before the changes will be a profitable step for you. - Consult with specialists
Everyone has their own individual situation: someone works in retail, someone in B2B or IT. Therefore, before changing the taxation model, it is better to discuss options with an accountant or tax consultant.
Conclusion: We Work as Before Now, But Look to 2027
Today it is important to fix several theses:
- Yes, the state has a clear intention to tie FOPs of groups 1–3 to general VAT rules through a turnover threshold of UAH 1 million.
- Yes, there is already a specific draft law from the Ministry of Finance published for discussion.
- No, this law is not yet in effect, and until January 1, 2027, no automatic changes for simplified FOPs have been launched.
As of the end of 2025, there are no grounds for panic decisions – there is time to calmly prepare, follow the news, and calculate scenarios for your business.
The material is for informational purposes only and is not individual tax or legal advice. To make decisions regarding your business, we recommend contacting a professional consultant.
