The Cabinet of Ministers of Ukraine approved the draft Law “On Amendments to Certain Laws of Ukraine Regarding the Definition of Business Entities”, which fully harmonizes the criteria for classifying enterprises with European Union standards.
The draft law modernizes approaches to defining micro, small and medium-sized enterprises (SMEs) and eliminates barriers that, due to outdated criteria, limited Ukrainian businesses’ access to European support programs. Previously, companies lost the opportunity to attract grants, soft loans and investments, and were also forced to separately confirm their status for European partners. At the same time, large players artificially fragmented businesses in order to benefit from benefits for SMEs.
The new law introduces three European classification criteria – number of employees, annual revenue and book value of assets. The thresholds are fully in line with EU standards:
– Microenterprise – up to 9 employees, up to EUR 2 million in revenue or assets;
– Small enterprise – up to 49 employees, up to EUR 10 million in revenue or assets;
– Medium enterprise – up to 249 employees, up to EUR 50 million in revenue or assets.
The figures of related companies will be aggregated, which makes it impossible to artificially split up businesses. Enterprises with a state share of more than 25% will lose their SME status after the end of martial law with a transitional period.
The result is fair and transparent rules for all market participants, as well as access to EU resources.
For Ukrainian businesses, this means automatic recognition of SME status in the EU, full access to European support programs (grants, loans, guarantees, innovation and export projects), increased demand for state support programs in Ukraine by an additional UAH 5-20 billion per year, more investment and easier access to European markets. The reform also ensures a level playing field – resources intended for SMEs will no longer be used by large companies.
Overall, the reform creates a powerful medium-term effect for the economy – it strengthens investment opportunities, innovative activity, exports and competitiveness of Ukrainian enterprises and is an important stage of Ukraine’s European integration. (Economy Ministry)