EU loan under conditions: Ukraine may be offered tax changes

The European Union may tighten requirements for providing Ukraine with financial assistance within the framework of a 90 billion euro package. As Bloomberg reports, part of the payments may be tied to tax system reforms.

At the center of the discussion is a review of the simplified taxation system, which currently allows individual companies to pay only 5% of income. Under the proposal, businesses with an annual turnover of over UAH 4 million may be required to switch to a standard model with a 20% VAT rate.

Financial assistance and reform requirements

The European Commission emphasizes that the financing conditions are agreed with the International Monetary Fund and are aimed at:

reducing the shadow economy
increasing budget revenues
harmonizing legislation with EU norms

At the same time, such steps may cause internal tension, as changes in tax policy are traditionally sensitive for business.

European integration context

The tax system reform is considered an integral part of Ukraine’s European integration. Even without additional loan conditions, Kyiv will have to gradually give up certain benefits in order to meet EU standards.

At the same time, the defense part of the assistance remains unchanged: the first tranche of 6 billion euros is expected in the near future and will be directed, in particular, to the purchase of Ukrainian drones.

Thus, EU financial support is increasingly combined with the requirements of structural reforms that will determine Ukraine’s economic model in the coming years.