“The Draft Law of Ukraine “On Amendments to the Tax Code of Ukraine Regarding the Moratorium on Changes to the Taxation Rules for Individual Entrepreneurs” (Reg. No. 14295) Legislative Initiative in the Context of Fiscal Policy In the current practice of tax regulation in Ukraine, there is a tendency to increase fiscal pressure, due to both internal budget needs and obligations to international creditors. In this context”, — write on: ua.news
Draft Law of Ukraine “On Amendments to the Tax Code of Ukraine Regarding the Moratorium on Changing the Taxation Rules for Individual Entrepreneurs” (reg. No. 14295)
Legislative initiative in the context of fiscal policy
In the modern practice of tax regulation of Ukraine, there is a tendency to increase fiscal pressure, due to both the internal needs of the budget and obligations to international creditors. In this context, draft law No. 14295 is an attempt to legislate the principle of stability of tax legislation (presumption of stability), which is one of the key principles of tax law, but is often ignored in practice.
The document proposes to amend subsection 8 of chapter XX “Transitional provisions” of the Tax Code of Ukraine, supplementing it with a new clause 15. The legal construction of the project is built in the form of a direct prohibition (moratorium) on the deterioration of the legal position of taxpayers who have chosen a simplified taxation system.
Casus Belli: What exactly is blocking this bill?
It is important to understand that this document exists a direct oppositional response on the specific plans of the government, made public the day before. On December 18, the Ministry of Finance submitted for discussion a revolutionary draft of amendments to the Tax Code (regarding Article 181 of the PKU).
The government initiative envisages the cancellation of “VAT immunity” for simplified taxpayers from January 1, 2027. The Ministry of Finance proposes to oblige all FOPs (regardless of the group) whose annual income exceeds 1 million hryvniasto register as VAT payers. This actually defeats the purpose of a simplified system for small businesses, forcing them to keep complicated VAT accounting or go into the shadows.
Bill No. 14295 is designed to preempt and block this reform even before its adoption by establishing a moratorium on lowering the VAT registration threshold.
Analysis of regulatory impact and the “moratorium” mechanism
A key element of the draft law is the establishment of a temporary benchmark — January 1, 2026. As of this date, it is proposed to “freeze” the rules of the game for small businesses. From a legal technical point of view, this creates a safeguard against future legislative initiatives that may curtail the rights of FPOs. The project establishes a mandatory ban on changing the essential elements of the tax:
Rates and tax base. The legislator seeks to make impossible any increase in the interest rates of the single tax or the expansion of the base (for example, the inclusion of amounts that are not currently included in the income).
Admission criteria. The document blocks the possibility of reviewing the list of permitted types of activities (KVEDs) and the range of counterparties. This is a direct defense against the ideas of prohibiting FOPs of the 3rd group from working with legal entities, which is often discussed as a method of combating “salary optimization”.
VAT barrier. Draft Law No. 14295 legally prohibits reducing the maximum amount of income for mandatory registration as a VAT payer. This is the “red line” for the Ministry of Finance’s proposal for a threshold of UAH 1 million.
Constitutional aspect and reference to Article 22
The authors of the draft law used an interesting legal technique, directly indicating in the text of the law that the violation of the norms of this moratorium is considered a violation of the third part of Article 22 of the Constitution of Ukraine. This constitutional norm guarantees that when adopting new laws or making changes to existing laws, the content and scope of existing rights and freedoms are not allowed to be narrowed.
Thus, the draft law tries to give tax benefits and regimes the status of constitutionally protected rights, which is a debatable issue in constitutional law, but is a strong argument in the field of human rights protection.
Enforcement and collision risks
Attention should be paid to the weak points of this legislative construction. The main problem lies in the principle lex posterior derogat legi priori (the later law repeals the earlier one). In the Ukrainian legal system, there is no mechanism that would prohibit the Verkhovna Rada from canceling this moratorium in the future by another law.
Therefore, if in the future the parliament, fulfilling the terms of the memorandum with international partners, adopts the law on the reform of the simplified system (the same law on VAT from 2027), it will simply cancel this point of the transitional provisions at the same time. Therefore, from a practical point of view, this draft law is rather a political and legal declaration and a temporary barrier that complicates, but does not make tax changes impossible.
Conclusion
Bill No. 14295 is an attempt to create a “reserve of stability” for small businesses and a tactical move to block the Ministry of Finance’s initiative on general “VAT-ization” of private enterprises. Its adoption would create significant guarantees for entrepreneurs, ensuring the preservation of simplified accounting. However, taking into account the government’s fiscal plans and the pressure to fill the budget (the expected effect of the VAT reform is estimated at UAH 40 billion), the prospect of passing this moratorium through the parliament looks like a difficult political confrontation.
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