The National Bank complicates the closure of sole proprietorships: financial monitoring and strict inspections for entrepreneurs

Closing an individual entrepreneur (FOP) without inspection will soon become impossible — the National Bank of Ukraine is initiating major changes aimed at strengthening control over the termination of entrepreneurial activity and minimizing financial fraud. This will significantly impact the microbusiness market, especially after years of relative “liberality” in FOP closure procedures, which allowed unscrupulous entrepreneurs to avoid fulfilling their obligations to the state and the budget.

What changes are planned by the National Bank
The National Bank has proposed a series of important adjustments to the operation of automated online services (particularly “Diia”), so that the closure of a FOP will occur strictly in stages and under close government supervision. The initiatives include:

• Introducing mandatory checks on the entrepreneur’s financial operations and tax payments before the registration of the termination of activity.
• Integrating automatic formation of a liquidation declaration indicating the full turnover and tax obligations for a specific period.
• Registering the termination of a FOP only after all listed procedures are completed and a positive conclusion from authorities is received.

The official motive is the fight against fictitious business closures and the minimization of schemes involving FOP use, where entrepreneurs evade taxes, leave debts, or use their status for illegal financial operations.

Reasons for the changes and economic context
In recent years, the number of so-called “drops” — FOPs that are opened en masse and quickly closed — has increased. These are used in grey and black financial schemes for moving money and avoiding taxes. Based on its own data and analysis of the banking sector, the National Bank concluded that most such manipulations rely on the ability to quickly close a FOP without real control over the entrepreneur’s tax obligations. This results in additional budget losses and distorts the competitive environment in the domestic market.

Moreover, from 2026, minimum wages and living standards are expected to rise, new tax rates will be implemented, and this prompts unscrupulous entrepreneurs to close FOPs while the procedure remains simple. The authorities are therefore rushing to strengthen preventive controls now.

How the new mechanism will work
It is stipulated that after submitting an application to close a FOP, the system will automatically verify:

• Full accrual and payment of the unified tax, social security contribution, and military levy.
• The presence of income on all FOP accounts, and whether these match reported and paid amounts.
• Absence of tax debts, unresolved tax obligations, or violations for previous tax periods.
• Any facts of blocked bank accounts and possible financial monitoring violations.

Afterwards, a draft liquidation declaration will be automatically generated for the entrepreneur. After all checks are completed, Diia or another state online service will provide a final decision regarding the possibility of closing the FOP. Simply submitting the application will not be sufficient; all control procedures must be passed.

Additional implications for business
The changes initiated by the National Bank will affect every FOP — both micro-entrepreneurs and mid-market players. At the same time, the regulator stresses that for those conducting a transparent business and honestly fulfilling tax obligations, only standard checks will occur, and closure timeframes usually will not be delayed. The main aim is to prevent abuses and fraudulent schemes.

For law-abiding FOPs, the consequences include:

• Mandatory preparation and submission of a detailed liquidation declaration.
• Control over repaying all debts, including social security contributions at the time of liquidation.
• Closure of business accounts only after the final decision on activity termination.
• The Tax Authority’s right to conduct documentary audits within three years, even after official closure.

Current situation and differences from previous procedure
Previously, an entrepreneur could use simple online tools to submit a termination application and be excluded from the Unified State Register within 24 hours, regardless of existing debts. Actual inspection and tax payment were handled retrospectively or not at all.

Now, under the proposed changes:

• No FOP will be closed automatically without procedural checks.
• All tax obligations must be paid before liquidation.
• A multilevel control system will be integrated, involving tax and banking authorities.

What entrepreneurs should expect
It is anticipated that the new concept will foster the legalization of the FOP sector and boost revenues for the budget. The National Bank and Ministry of Digital Transformation emphasize that the anti-fraud program will not complicate life for “white” businesses, but will become a serious obstacle for schemes aimed at tax evasion or using FOPs as cover.

However, during the implementation of new procedures, it is possible that:

• Closure timelines for FOPs will increase if discrepancies are found;
• Additional accounting requirements will arise;
• Stringent monitoring of banking operations will be introduced;
• Closure will be more complicated for FOPs of the 2nd and 3rd groups with larger transaction volumes.

Conclusion
The National Bank’s and government’s plans to make FOP closure “without inspection” impossible set the stage for a new culture of responsible entrepreneurship: transparency and openness are now essential not only for exiting business but also for sustaining it in future. A too-quick “exit window” will no longer work, and honest entrepreneurs should prepare all documents and reports in advance for proper liquidation of activity.

Author — Maksym Bahniuk, Head of Tax and Customs Law Practice at the Law Firm “WINNER”.

If you have any additional questions regarding legal support for sole proprietors (taxation systems, registration, reporting, inspections, liability before regulatory authorities, etc.), feel free to request a consultation!