Ukraine Proposes 6% “Gig Economy” Tax to Formalize Rideshare and Delivery Drivers

Kyiv, October 23, 2023. Ukrainian lawmakers have tabled a draft law aimed at bringing hundreds of thousands of gig workers out of the shadows. A cross-party group of 18 MPs, including Yaroslav Zheleznyak, today registered Draft Law No. 10166, which introduces a special voluntary tax regime for income from individual activities, with a flat rate of 6%.

The initiative seeks not only to boost budget revenues but also to align Ukrainian legislation with EU norms, creating a clear legal framework for cooperation with online platforms like Uber, Bolt, and Glovo.

Who is affected and what does the new regime entail?

The proposal covers more than 20 types of activities, including courier delivery, passenger taxi transportation, cosmetology, hairdressing, and other personal services. According to the authors, the innovation could create “transparent and understandable regulation” for over 500,000 self-employed individuals.

Key parameters of the regime, as reported by RBC-Ukraine:

• Low tax rate: Only 6% of income.
• Simple administration: No need to register as a sole proprietor (FOP), hire an accountant, or file tax returns.
• Voluntary: Transition to the new regime is solely at the discretion of the individual.

“Those who wish can remain on their current, familiar system,”

explained one of the document’s authors, MP Yaroslav Zheleznyak, in his Telegram channel today.

Why it matters: Tax digitalization and EU harmonization

The initiative has two key dimensions: domestic and international.

For Ukraine, it is a step towards “de-shadowing” a significant segment of the economy and simplifying life for hundreds of thousands of citizens. A special focus is on work with online platforms (Uber, Bolt, Uklon, Glovo, etc.), which, according to Zheleznyak, already unite over 300,000 drivers and couriers.

“This is the de-shadowing of the economy and a significant step forward in tax digitalization,”

the parliamentarian emphasized in his statement.

For international relations, the project is a necessary condition for harmonization with EU law. It aims to implement the EU’s DAC7 directive, which obliges digital platform operators to automatically exchange tax information on their partners’ income. Creating a clear tax regime for the self-employed is the foundation for Ukraine to meet these requirements. This move is closely watched by international investors assessing the regulatory maturity of Ukraine’s market during the war and recovery.

Context: Increasing tax pressure

The draft law emerges amid other active steps by the authorities to strengthen fiscal control and find additional budget revenues. Recently, the Rada passed in the first reading a law lifting the moratorium on tax audits. Furthermore, parliament approved an increase in the corporate income tax for banks from 18% to 36% for 2024-2025.

Against this backdrop, the 6% proposal for the self-employed appears more as an incentive for formalization rather than a punitive measure.

Analysis: Pros and potential risks

The advantages of the initiative are obvious:

• For the state: Additional budget revenues, integration into the European legal framework, obtaining data on real turnover in the service sector.
• For the self-employed: Extremely simplified and cheap formalization, potential for social guarantees (with further system development), legal cooperation with platforms.
• For platforms: Clear “rules of the game,” reduction of reputational and legal risks.

Questions and risks:

• Voluntariness: Will a 6% rate be attractive enough for mass formalization? Or will many prefer to remain in the shadows?
• Administration: How well-developed and user-friendly will the digital accounting system be, especially for non-tech-savvy professionals like manicurists?
• Tax base: How will income be accurately determined, especially when working partially through platforms and partially for cash?

For global readers, this development highlights Ukraine’s ongoing efforts to modernize its economy and tax system even during wartime, presenting potential opportunities for international platform businesses and investors eyeing the post-war reconstruction phase.

A proposal to watch

Draft Law No. 10166, registered today, is not just another tax initiative. It is an attempt to systematically address the problem of a huge informal sector that exists alongside a rapidly growing digital economy. The success of the proposal will depend on two factors: a final, technically flawless mechanism and effective communication of its benefits to the end users—the self-employed themselves.

If the regime is truly simple, unobtrusive, and beneficial, it could become one of the most successful business formalization steps in recent years. If it creates new bureaucratic burdens or proves financially unattractive, the shadow economy may only deepen. For now, the initiative appears a balanced and timely response to the challenges of the digital age and European integration.