A committee hearing on the development, protection, and support of small and micro businesses was held in Kyiv. The event was organized by the Verkhovna Rada Committee on Economic Development, the Ukrainian Business Council, and the Center for International Private Enterprise (CIPE). Members of Parliament, representatives of the executive branch, and leaders of major business associations took part in the discussion.

Serhiy Taruta, First Deputy Chair of the Verkhovna Rada Committee on Economic Development, called on participants to engage in an open dialogue, emphasizing that the meeting was not merely a formality—the Committee genuinely seeks to involve the business community in the legislative process. He recalled the document “Vision of Ukraine by 2030,” developed back in 2015–2017, which set a target of $710 billion in GDP, achievable primarily through the development of small and medium-sized businesses. Mr. Taruta clearly articulated the Committee’s position on VAT for sole proprietors: “As long as the war continues, no drastic moves in this direction should be made.”

He also proposed that business associations send their representatives directly to Committee meetings to participate in discussions of draft laws that concern them.

Anka Feldhusen, Ukraine’s Business Ombudsman, described the institution as an independent platform for protection, positioned equidistant between business and the state—not as a business advocate, but as an arbitrator who reviews specific complaints and works through them with all stakeholders, including the State Tax Service and the Verkhovna Rada. She noted that she has held the position for only two months but plans to remain in Ukraine for at least two years, and invited entrepreneurs to contact her through the official website.

Natalia Zhugai, CIPE Program Manager, highlighted the organization’s philosophy: a strong private sector is the foundation of a strong economy, and a strong economy is the cornerstone of democracy. CIPE has been operating in Ukraine for over 20 years and considers supporting the private sector in the decision-making process to be its key mission, especially in the context of war. Ms. Zhugai expressed her support for such platforms for dialogue between business and government, as they are an essential tool for finding optimal solutions.

Nazarii Volyanskyi, vice president of the Ukrainian Taxpayers Association, presented the business community’s unified stance on the introduction of VAT for sole proprietors—and that stance is a categorical “no.” The association, which represents approximately 4,000 small and medium-sized businesses, has already enlisted lawyers to draft an alternative bill. The key idea is to introduce regulations for a simplified system no earlier than one year after the end of martial law or from the moment Ukraine joins the EU. Among the main risks of the Ministry of Finance’s current initiative, Mr. Volyansky cited the mass fragmentation of sole proprietorships, the shift of business into the shadow economy, and a significant increase in administrative complexity, which the tax service has failed to substantiate with calculations.

Ihor Marchuk, Chair of the Subcommittee on State-Business Relations and Investment of the Verkhovna Rada Committee on Economic Development, called the government’s comprehensive “Big Beautiful Bill” a “disaster from the standpoint of legislative practice.” Primarily because of the package approach to submission, where important and useful provisions—such as the regulation of digital platforms and the reduction of the duty-free import threshold—are artificially combined with VAT for sole proprietors. He called for the bill to be “unpacked” and its parts to be advanced separately.

Mr. Marchuk also spoke in detail about the revolutionary bill No. 14030, initiated in the Committee by Hanna Lichman, on which the committee has been working for over a year and a half. The document introduces a risk-based approach to state oversight and, for the first time, grants the public council the right to block decisions by executive control bodies. According to him, this effectively implements the European “Think Small First” principle in Ukrainian legislation.

Hanna Lichman, Chair of the Subcommittee on Regulatory Policy of the Verkhovna Rada Committee on Economic Development, urged against making hasty decisions and called for striking a delicate balance between business interests and the state’s financial stability. She candidly acknowledged that Ukraine is currently “walking a financial tightrope” and that obligations to the IMF cannot be ignored—after all, a lack of funds in the budget threatens the economy, society, and the Armed Forces. At the same time, the MP agreed that the problem of the artificial fragmentation of sole proprietorships does indeed distort the competitive environment, and called for more active use of existing tools by fiscal and law enforcement agencies, rather than placing this burden on lawmakers.

Eduard Golodnitsky, president of the International Advisers Association, focused on the issue of the quality of implementation of the EU VAT Directive. According to him, the Ministry of Finance proposes to introduce VAT for sole proprietors while retaining the entire complex Ukrainian administrative system—tax invoices, blocking, etc.—instead of implementing a simplified European reporting format. The entire declaration could be reduced to five items, and any document with ten details would become a VAT invoice. Mr. Golodnitsky insists: if VAT is to be reformed, it should be done honestly, in accordance with the directive, and not through an interpretation that benefits administrators.

Rostislav Korobka, vice president of the Ukrainian Chamber of Commerce and Industry, supported the position against imposing VAT on sole proprietors, while acknowledging that members of parliament will face significant pressure due to the budget deficit and the demands of the IMF and the EU. The UCCI, where 80% of its 8,000 members are small and medium-sized businesses, emphasizes that sources to fill the budget should be sought primarily in customs and other gray areas, rather than at the expense of sole proprietors.

Separately, Mr. Korobka raised the issue of State Tax Service reform: he supported an open competition for the position of service head and regional office directors and emphasized that without decent salaries for inspectors—backed by international partners—no reform will yield results: “Business is created to make a profit, not to serve the tax authorities.”

Boris Emeldesh, president of the All-Ukrainian Professional Association of Entrepreneurs and ambassador of the National Business Coalition for Small and Micro Businesses, spoke about the systemic lack of institutional protection for businesses and the need to strengthen the State Regulatory Service as an independent body. According to him, in 2025, the SRS reviewed 4,500 regulatory acts, and one in three was rejected or received comments—which clearly demonstrates that without this filter, the economy would systematically face significantly more harmful decisions.

Mr. Emeldesh proposed introducing mandatory regulatory impact analysis for all draft laws without exception—regardless of the source of the legislative initiative. He also calculated that with the threshold of 4 million hryvnias proposed by the Ministry of Finance (VAT for sole proprietors), VAT administration alone would cost businesses approximately 120,000 hryvnias per year—meaning 3% of turnover goes exclusively to accounting, even before any operating expenses.

Boris also noted that the requirements of the state grant program do not reflect the actual status of the Odesa region as a combat zone, which creates unequal conditions for local businesses. It is necessary to amend CMU Resolution No. 738 and include the Odesa region in the list of regions receiving enhanced support so that entrepreneurs can receive increased grants and keep their businesses afloat during wartime.

Yulia Andrusiv, Deputy Business Ombudsman, reported on an ongoing study examining the impact of shortcomings in the regulatory process on business. In particular, there have been instances where regulatory acts were adopted without consultation with the Regulatory Impact Assessment Board (RIAB) or contrary to its negative opinion. Researchers also see a problem in the quality of the SRC’s opinions themselves—apparently due to a lack of resources and expertise. The representative expressed her willingness to cooperate with the committee and business associations.

Oleksandr Yurchak, head of the Ukrainian Cluster Alliance, drew attention to the lack of a regulatory framework for cluster development in Ukraine—despite the fact that in the EU, clusters are one of the key tools for enhancing the competitiveness of SMEs. The Alliance brings together over 40 clusters and more than 3,000 small and medium-sized enterprises; with donor support, a project is already being implemented in six regions, three of which have adopted regional cluster programs. However, since 2020, when the first draft of the national cluster development program was introduced, there have been zero results at the national level. Yurchak asked the committee to assist in promoting legislative changes through the Ministry of Economy.

Oleksandr Spasichenko, deputy director of the Meat Industry Association, criticized the “National Cashback” program from several angles.

• First, there is the issue of discrimination: sole proprietors under the simplified tax system are explicitly excluded from the program without any justification.
• Second, effectiveness is in question: the Ministry of Economy itself has estimated the impact on GDP at a few thousandths of a percent, while administering 46,000 product lines, 14,000 pharmaceutical items, and 38,000 book titles costs the budget real resources.
• Third, there are foreign trade risks: a mechanism that de facto restricts import access (a 15% cashback rate where the import share exceeds 35%) could serve as grounds for reciprocal actions by trading partners during negotiations to open new markets. At the same time, a trade mission to Asian countries is currently underway, involving the “Meat Industry” Association and the leadership of the State Service of Ukraine for Food Safety and Consumer Protection, aimed at expanding access for Ukrainian products to Singapore, the Philippines, and Vietnam. In this context, adherence to the principles of mutual trade openness and equal market access conditions takes on particular importance.

Mr. Spasichenko concluded: the program should either be abolished or made equally accessible to all.

Oleksandr Baldyniuk, president of the “Ukrkondprom” Association, noted that cashback is a useful tool for supporting domestic producers in a situation where Ukrainian food manufacturers’ foreign competitors are not facing the negative effects of the war, which impact production costs. He supported the proposal to extend the program to small businesses and eliminate discrimination against sole proprietors.

Separately, Mr. Baldinyuk emphasized the importance of advancing Bill 6068-d on the implementation of EU Directive 633/2019 regarding the prohibition of unfair commercial practices—the document has already been supported by the Committee but has “stalled” at the stage of coordination procedures. He explained that the adoption of the law would help reduce consumer prices and cut down on unjustified costs in the food sector. In addition, the bill is part of Ukraine’s European integration process, and Ukraine’s EU accession procedure requires its mandatory implementation. Oleksandr Baldyniuk called on the Committee’s leadership to take an active stance in discussing this bill at the Parliament’s Conciliation Council and bringing it to the floor for a vote.

Iryna Ogorodnikova, a specialist with the Association of Tax Consultants, raised an issue that made it into the top 5 complaints on the “Pulse” platform: uncertainty regarding the fiscalization of payments made through payment services (IziPay, LikPay, etc.). Due to outdated wording in the law on cash registers and numerous clarifications from the State Tax Service equating these transactions to cash transactions, 30,000 audits were conducted in 2025—despite the fact that 90% of all retail transactions are already conducted in non-cash form. Starting in September 2025, fines of 100% and 150% for repeat offenses will be fully enforced. Iryna Ogorodnikova called for a systematic resolution of the issue: either through legislation or by clarifying the State Tax Service’s position.

Oleksandr Taranenko, first vice president of the All-Ukrainian Bakers Association, supported the need for legislative regulation of relations between suppliers and retail chains (Bill No. 6068d), emphasizing that the problem is not limited to payment terms. As an argument, he cited the memorandum signed by more than 20 supplier associations just days before the start of the full-scale invasion—a document that established the systemic need for such regulation even before the war.

Oleksiy Frantsuz, Head of the GR Division at the Ukrainian Retailers Association, refutes the existence of systemic problems in relations between suppliers and retail chains, noting that the issues that arose at the start of the full-scale invasion have been resolved, and payments are now made in accordance with market conditions. At the same time, he emphasized that in the event of implementing any EU directive, it is important to take into account national interests, market specifics—particularly the conditions of martial law and the potential impact on consumers—rather than mechanically copying the text. The representative of the Retailers Association also recalled the memorandum signed by retail chains, in which they independently regulated markups and payment terms for socially significant goods.

Yuriy Peroganych, head of the Association of Information Technology Enterprises of Ukraine, highlighted two issues regarding the competitive environment. Public procurement regulations currently do not restrict the purchase of goods imported in violation of customs rules—meaning that legal manufacturers compete with smuggled goods on equal terms. And due to free trade agreements with CIS countries, Chinese goods (in particular, televisions and electronics) are imported into Ukraine under the guise of being Uzbek or from other countries, thereby circumventing customs duties. Peroganych appealed to the committee to instruct the Ministry of Economy to conduct an economic analysis of these agreements and consider the issue of their denunciation.

Yuriy also emphasized the harmfulness of tax breaks for Chinese marketplaces and called on lawmakers to abolish tax breaks on international parcels and switch to the European IOSS system.

Yefrem Lashchuk, an expert at the Economic Expert Platform, presented the results of a joint study by think tanks (supported by CIPE) on the issue of artificial business fragmentation. Key finding: Ukraine is not unique in this phenomenon, and the fragmentation scheme has not become as widespread as is often claimed—estimated budget losses amount to 12–14 billion hryvnias per year. The researchers identified specific indicators for detecting fragmentation schemes without changes to legislation: a shared IP address in the reporting of different companies, a sole proprietorship regularly reaching the group limit for several months in a row with annual recurrence, similar registration dates, a shared legal address, and shared infrastructure, among others. Yefrem Lashchuk also emphasized: where it is possible to act effectively without legislative changes, this approach should be a priority.

Oleksandr Tsybort, Ukraine’s Deputy Minister of Economy for Digital Development, highlighted the particular value of small and medium-sized businesses, which continue to operate under extremely difficult conditions, and spoke about the Ministry of Economy’s current initiatives.

The “Pulse” platform has already collected over 500,000 responses from entrepreneurs and allows for real-time tracking of emerging issues. Tsybort also reported that Ukraine ranks first in the world in terms of digitalization penetration among the population, and emphasized the importance of using this infrastructure for the voluntary de-shadowing of the economy. Among the specific projects is a new mechanism for micro-employment, where registration will take about 20 seconds and serve as a springboard to full-fledged entrepreneurship.

Lyudmila Patiuk, head of the Volyn Microbusiness Association and representative of the “Alliance Romb” business association, provided statistics that debunk the myth that microbusinesses evade taxes. During the peaceful years of 2020–2021, the single tax increased by 25% annually. In 2022, despite the loss of 11% of the territory and the exemption from paying the single tax and the unified social tax, the decline was only 4%—businesses continued to pay voluntarily. In contrast, in 2025, growth fell to 2%—immediately after the introduction of the military levy and mandatory social security contributions, which forced some entrepreneurs in the first group to simply shut down their operations.

“Microbusiness is the easiest and best partner for the state, because the state invests nothing. We simply pay regularly, regardless of the income we receive,” Ms. Patiuk concluded, calling for the inclusion of microbusiness representatives in a full-fledged legislative dialogue.

Based on the results of the hearings, recommendations will be prepared and sent to all relevant committees of the Verkhovna Rada and the Cabinet of Ministers. The next meeting between members of the Economic Committee and leading business associations of the MMB will be scheduled in a few months.