The National Restaurant Association of Ukraine (NRAU) proposes reducing the VAT rate for restaurants and catering services to 7%, as well as overhauling the taxation system as part of a comprehensive reform dubbed “Diia City HoReCa.” Preliminary estimates suggest this could increase annual budget revenues from UAH 8.9 billion to UAH 13.5 billion. As reported by *Dilo* (citing *Interfax-Ukraine*), this is the latest proposal from the industry.
**What else the restaurant sector is proposing**
The proposed concept involves moving away from the “Group 2” simplified tax regime and transitioning to “Group 3,” which features a tax rate of 4% or 6% of turnover (depending on VAT status). It also includes a provision to allow businesses under the simplified tax system to obtain licenses for the sale of alcohol.
“This would enable everyone to operate transparently—recording all transactions, reporting actual turnover, and ensuring full compliance—effectively turning the state into a partner for restaurants,” explained Taras Kovalchuk, head of the association, during a press conference held by NRAU representatives.
According to the association’s estimates, this model could boost budget revenues by UAH 4.6 billion annually, assuming that turnover and staffing levels remain constant.
**Challenges complicating restaurant operations**
Beyond the tax burden, restaurant operations are further complicated by air raid alerts, shelling, street closures, and power supply interruptions. Industry representatives note that in September, some establishments in Kyiv saw their revenue plummet—in some cases by a factor of ten—due to these circumstances. Meanwhile, electricity generated via on-site generators can cost as much as UAH 63.8 per kWh. Businesses also face a shortage of workers and difficulties with the reservation of personnel. Another issue is the setup of shelters: according to the association, 95% of restaurants rent their premises and are unable to carry out such work themselves.
