The International Monetary Fund (IMF) emphasizes the urgent need to simplify tax administration in Ukraine to reduce the administrative burden on businesses. According to research by CASE Ukraine, presented at the end of 2025, Ukrainian entrepreneurs operating under the general taxation system with VAT spend an average of 478.2 person-days annually on tax and accounting operations. For context, globally, this figure averages 29 person-days, while in EU countries, it stands at approximately 20 person-days per year.
Therefore, VAT payers in Ukraine devote 16 times as much effort to tax administration as the worldwide average, and 24 times as much as in the EU. This significant administrative burden drives entrepreneurs to use the simplified taxation system (FOP) not only because of lower tax rates but also to avoid the complexities inherent in maintaining accounting processes under the general system, where the costs of staffing accounting personnel sometimes exceed business revenue.
The IMF’s concluding press release highlights that reforms aimed at restricting abuse of the simplified taxation regime remain a priority. These reforms encompass limiting business fragmentation, combating opportunistic transitions between tax regimes, and eliminating concealed employment. To facilitate a successful transition, Ukrainian authorities must implement a comprehensive package of measures to optimize tax administration and lower compliance costs for responsible taxpayers.
Consequently, the IMF has formally acknowledged this issue and stressed the need for a systemic resolution. Currently, the Ukrainian government is developing relevant optimization measures. This matter has attained the status of an international commitment within the framework of cooperation with the IMF.
