Councillor Bereza on the introduction of VAT for small businesses: «This will have a negative effect on Mykolaiv»

Head of the administration of the Central District of Mykolaiv and city council member from the party «Proposal» Oleksandr Bereza. Photo: _nikvesti

Oleksandr Bereza, a member of the Mykolaiv City Council, believes that the legislative initiative to introduce a value-added tax for individual entrepreneurs will have negative consequences for the economy of frontline cities, including Mykolaiv.

He expressed his position in a post on Facebook.

According to the deputy, the city budget is not a recipient of value added tax, so the introduction of VAT for individual entrepreneurs will not lead to an increase in revenues to the budget of Mykolaiv.

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«In the long run, this will have a significant negative effect on Mykolaiv. The introduction of VAT for small and medium-sized businesses will lead to a reduction in business activity. Under the current circumstances, large enterprises are relocating from the city. Due to the proximity of Mykolaiv to the frontline, big business does not consider it an investment destination», writes Oleksandr Bereza.

The councillor noted that the economy of Mykolaiv is currently based on small businesses — coffee shops, street food, delivery services, beauty salons, services and trade. All these areas operate thanks to the simplified taxation system for individual entrepreneurs.

In his opinion, a reduction in the number of entrepreneurs or the shadowing of small and medium-sized businesses will only worsen the already difficult situation with business activity in cities located near the frontline, particularly in Mykolaiv.

Oleksandr Bereza also stressed that a possible reduction in business activity would have a direct impact on the city budget, which is currently in deficit.

«The work on the development of Mykolaiv's city budget for 2026 has made it clear that the most necessary expenditures are more than 1 billion hryvnias higher than the projected amount of the budget itself. We will cut them by 20%. Next year, the city will live with a survival budget», said the deputy.

As a reminder, on 18 December, the Ministry of Finance of Ukraine published a draft law that provides for the mandatory payment of value added tax by small businesses that are subject to the simplified taxation system.

This draft law is a condition for Ukraine to receive a new programme from the International Monetary Fund. Although it provides funding of about $8 billion, the programme is necessary to attract funds from other international partners, such as the European Union, the World Bank, and partner governments.

The document published by the Ministry of Finance proposes to introduce VAT for all taxpayers under the simplified taxation system (groups 1, 2 and 3) if their annual income exceeds 1 million hryvnias.

At the same time, the obligation to pay VAT will not apply to individual entrepreneurs in these groups whose annual income does not exceed 1 million hhryvnias. They will become VAT payers from the moment their income for the current year exceeds this threshold.

A separate exemption is proposed for e-residents who have opened a sole proprietorship in Ukraine: they will not be charged VAT regardless of their turnover.

As a reminder, business activity continues to decline in Mykolaiv region. In the first nine months of 2025, 5,740 sole proprietors ceased their activities, which is almost equal to the number of new registrations.