Monthly reporting for Ukrainian entrepreneurs in 2025: why the reform failed and what will change in 2026
In 2025, Ukrainian sole proprietors (FOPs) and legal entities with hired employees faced the introduction of monthly reporting on personal income tax (PIT), the unified social contribution (USC), and the military levy. This reform, introduced under Law No. 3666-IX, was initially promoted as a way to “de-shadow” the economy and increase transparency. In reality, it only brought new difficulties for entrepreneurs and failed to boost budget revenues. By 2026, a return to quarterly reporting is expected, which should ease the bureaucratic pressure on small businesses.
Until 2025, Ukrainian FOPs and legal entities submitted their tax reports for hired employees once per quarter. This applied to the main tax payments:
- PIT (personal income tax)
- USC (unified social contribution)
- Military levy
This procedure was defined by the Tax Code of Ukraine (Articles 49, 176, 178) and the law “On the Collection and Accounting of the Unified Contribution.” Quarterly reporting allowed entrepreneurs to plan their accounting expenses, and for micro- and small businesses, it was less burdensome in terms of both time and money.
What Changed: Monthly Reporting from 2025
At the end of 2023, the Verkhovna Rada adopted Law No. 3666-IX (“On Amendments to the Tax Code and Other Legislative Acts of Ukraine to Balance Budget Revenues”), which came into force on January 1, 2025. Under the new rules:
- FOPs and legal entities with hired employees are required to submit monthly consolidated reports on USC, PIT, and the military levy.
- Instead of 4 reports per year, each entrepreneur must now submit 12 reports.
The Logic Behind the Change
The Ministry of Economy and the government justified this rule by saying they needed to monitor “staff turnover” at enterprises and timely identify companies eligible for “critical” status for reserving employees during wartime.
However, as entrepreneurs and experts repeatedly noted, FOPs do not fall under the criteria for reservation, and this information is not relevant for microbusinesses. That is why this requirement looked like a technocratic experiment from the start, unsupported by the real needs of the sector.
Consequences: More Reports – No Real Benefit
MP Halyna Vasylchenko has spoken frankly about the outcome of the reform:
“Until January 1, 2025, both FOPs and legal entities submitted reports for their hired employees once per quarter. With the adoption of the law that raised taxes from 2025, an additional provision on monthly reporting was added. Now, all entrepreneurs, instead of four reports a year, must submit 12… This brought no effect to the budget, but complicated administration.”
In practice, the new reporting system:
- did not increase budget revenues
- did not reduce the shadow labor market
- only complicated the work of microbusinesses, most of which rely on outsourced accounting services
Spending on accountants increased, and self-employed entrepreneurs faced greater bureaucratic pressure.
How It’s Being Fixed: A Return to Quarterly Reporting
The negative reaction from the business community, professional associations, and MPs prompted an initiative to change the rules. In March 2025, Draft Law No. 11212 was registered in the Verkhovna Rada, proposing to cancel the requirement for monthly reporting on USC, PIT, and the military levy for FOPs and legal entities with hired employees. The draft law has broad cross-party support, including from the head of the tax committee.
“I am glad that we managed to fix this provision. From 2026, FOPs will return to quarterly reporting,” emphasized MP Vasylchenko.
It is expected that starting in 2026, FOPs will again be able to report quarterly, as was the case before 2025.
Legislative Basis
- Law No. 3666-IX of 20.09.2023: introduced monthly reporting starting in 2025
- Tax Code of Ukraine (Articles 49, 176, 178): regulates reporting for FOPs and legal entities
- Draft Law No. 11212 of 28.03.2025: proposes a return to quarterly reporting from 2026
- Sources: website of the Verkhovna Rada, official explanations from the Ministry of Finance, public comments by MPs (notably Halyna Vasylchenko)
Why This Matters for Business
Monthly reporting brought no benefit to the state or entrepreneurs. Instead, it:
- complicated the running of small businesses,
- created extra financial burdens,
- became a factor hindering the development of entrepreneurship.
The return to quarterly reporting is a victory for common sense and constructive dialogue between business and the state. In 2026, FOPs will again be able to report under the old, familiar rules this should give a boost to the recovery and stabilization of microbusiness in wartime conditions.
Key Facts and Laws:
- 2025 monthly reporting (Law No. 3666-IX)
- 2026 (expected) return to quarterly reporting (Draft Law No. 11212)
- FOPs and legal entities with employees should follow the passage and implementation of new rules.
About the Author
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