The International Monetary Fund (IMF) has agreed to modify the prerequisites for a new $8.1 billion loan program for Ukraine, removing previous conditions related to tax regulations for small businesses and other fiscal measures. This announcement was made by Ukrainian Prime Minister Denys Shmyhal during a press briefing.
The new loan proposal is set to be reviewed at the upcoming IMF Board of Directors meeting. Shmyhal noted that these adjustments were made following a recent visit to Kyiv by IMF Managing Director Kristalina Georgieva. Under the new agreement, all four conditions will now need to be fulfilled after the Board’s approval of the program.
“One of the most sensitive aspects of the IMF program involves taxation for small businesses. We have negotiated to raise the VAT threshold for small entrepreneurs to 4 million UAH, which is the highest VAT level currently in Europe. Consequently, these changes will not affect two-thirds of all small businesses,” stated Shmyhal.
Shmyhal also announced plans to present a consolidated tax bill to the Parliament, which will address issues related to digital platforms, package taxation, and the continuation of military tax after martial law is lifted. The timeline for these changes remains a topic for further discussions with the IMF.
In November, Ukraine and the IMF had agreed on the framework for a new 48-month extended funding program, which included 16 structural benchmarks that the government and Parliament are expected to implement, along with four mandatory prior actions that must be met before the program can commence.
In December 2022, the Ministry of Finance proposed a draft law mandating VAT payments for individual entrepreneurs with annual incomes exceeding 1 million UAH. However, following public backlash, the Ministry began drafting a revised version that would increase the threshold to either 2 million UAH or 4 million UAH per year, as reported by Bloomberg.
The IMF has relaxed conditions for a new loan program for Ukraine, allowing the country to meet key fiscal requirements post-approval. This shift follows negotiations aimed at supporting small businesses and adjusting tax regulations.