Kyiv Moves on Controversial Tax to Unlock $8B IMF Loan

Ukrainian authorities are pushing forward with a contentious new tax targeting self-employed entrepreneurs, a key policy demand from the International Monetary Fund (IMF) needed to unlock over $8 billion in wartime financing.

Ukraine Finalizes Tax Bill for Entrepreneurs

This week, Ukraine’s Finance Ministry plans to finalize a draft bill that imposes a value-added tax on revenue from the country's widely used self-employment status. The proposed legislation also aims to broaden the category of foreign parcels subject to a levy.

"We expect this to happen by the end of this week after we receive approval from all the relevant government agencies," ministry spokesman Dmytro Gerasymenya confirmed on Monday.

The Price of a Four-Year IMF Program

The tax overhaul is a critical condition for securing fresh funding under a new four-year program from the IMF. Last year, Kyiv agreed to eliminate several tax exemptions to secure the deal as Russia's war nears its fifth year.

The IMF board is expected to approve the aid package, possibly next month, once all conditions are met. Ukrainian officials reached a staff-level agreement on the new loan with the fund in late November.

Political Hurdles and Business Backlash

The measure is expected to face significant resistance. It must first be approved by the cabinet under Prime Minister Yuliia Svyrydenko before being sent to lawmakers, who have previously rejected it.

The policy has already triggered a public outcry, particularly from small businesses. The self-employment tax loophole was commonly used by a wide range of Ukrainian companies and restaurant chains to lower their tax payments.

Mounting Pressure Forces Fiscal Reform

Ukraine is under increasing pressure to satisfy the IMF's demands following a series of setbacks last year. These include battlefield losses, a widening corruption scandal, and a U.S.-led push to end the war on terms viewed in Kyiv as largely favorable to Russia.

The nation's financial needs are immense. In a separate effort to keep the war-battered economy afloat, European Union leaders agreed last month to loan Ukraine €90 billion ($106 billion) for the next two years.