IMF Deal Details

Taxes and tariffs for Ukrainians will gradually increase under the new IMF programme due to the revision of tax benefits, the expansion of the tax base and a shift towards more market‑based energy prices.

1. What kind of agreement Ukraine signed with the IMF
   The new Extended Fund Facility (EFF) programme is designed for several years and provides about USD 8–8.2 billion in loans tied to the implementation of fiscal and structural conditions. Its goal is to gradually reduce the budget deficit and dependence on external aid by increasing the state’s own revenues.

The key commitment blocks relate to:

• tax reform and the reduction of exemptions;
• raising energy tariffs to cost‑recovery levels;
• strengthening tax administration and combating the shadow economy.

2. Taxes: what exactly may increase
   The government and the IMF are agreeing on broadening the VAT base, a possible rate hike and cutting exemptions and special regimes. For small businesses this means VAT for part of sole proprietors, a higher turnover threshold and the trimming of simplified schemes. The focus also includes a progressive personal income tax scale and “luxury taxes” with higher rates for large incomes and expensive assets. At the same time, efforts to combat tax evasion are being stepped up: tighter control over imports, closing customs loopholes, taxing digital income and limiting cash schemes, which levels the playing field for compliant businesses but increases risks for those operating in the shadows.
3. Tariffs: gas, electricity, heating
   The memorandum separately stipulates higher tariffs for gas, electricity and heating, since current prices cover only about half of their real cost. By mid‑2026 the government must adopt a roadmap for market liberalisation with a gradual move to cost‑recovery tariffs after martial law ends; preparatory steps — lifting the moratorium, new tariff‑setting methods and a revision of subsidies — are starting already. For households this will mean several waves of higher utility bills and a transition to a model where the state provides targeted support to the most vulnerable instead of subsidising everyone.
4. How households will feel the impact
   For an average family the impact will depend on income, consumption and behaviour. Utility bills will gradually rise, especially after the moratorium on higher gas, heating and hot‑water prices is cancelled, while meters, energy efficiency and frugal consumption will become more important. Consumption taxes (VAT and excise) will hit hardest those who spend most of their income on everyday goods, whereas part of the burden will shift to high incomes and luxury items. For simplified‑tax entrepreneurs whose turnover exceeds the new threshold, the financial burden will grow due to mandatory VAT registration and stricter oversight. At the same time, higher tax revenues and lower tariff subsidies should reduce the risks of runaway inflation and default, supporting long‑term hryvnia stability and the ability to fund the army and social programmes.
5. What will change for businesses
   For compliant businesses the environment will become more transparent, but mistakes will be more costly. Stronger customs controls will make “grey” imports riskier, shifting competitive advantages towards efficient business models. The broader VAT base and removal of exemptions will force companies to plan pricing and cash flow more carefully to preserve margins. The prospective progressive PIT scale and tougher oversight of payroll will encourage a move away from cash‑in‑envelope wages and increase the role of legal incentives, bonuses and stock‑option plans instead of informal top‑ups.
6. Are there “red lines” for the government in the deal
   Ukraine is balancing between IMF demands and the realities of a country at war: some of the most painful tax measures for small businesses have already been softened by narrowing the group of sole proprietors subject to the new VAT rules. The IMF also requires that tariff increases be accompanied by targeted protection for vulnerable households and that full market liberalisation take place only after the war, giving the government room for gradual and adjustable decisions.
7. How Ukrainians can prepare
   At household level, the logic is straightforward: plan the family budget assuming higher utility and goods prices; check eligibility for subsidies or benefits and apply in advance; invest in home energy efficiency where possible (meters, insulation, efficient appliances) to offset future tariff hikes; and for sole proprietors, analyse turnover and business models to prepare for possible VAT registration and a shift to fully compliant schemes. For companies it is crucial to model the impact of tax‑rate changes, benefit cuts and tariff increases in their financial plans and to update tax strategies, pricing policies and contracts with counterparties.

If you have questions or issues related to planning your tax burden, forecasting the impact of new tariffs on your family or business budget, or preparing your company for IMF‑related requirements, seek professional advice to analyse your situation and minimise potential consequences.
Author: Ihor Yasko, Managing Partner at Winner Law Firm, PhD in Law.