Businesses are being prepared for new reporting under EU standards: Cabinet of Ministers again approved the draft law
The Cabinet of Ministers approved a draft law introducing mandatory sustainability reporting according to European standards in Ukraine. The largest companies should be the first to report under the new rules, and the first reporting period will be 2028.
The draft law was prepared by the Ministry of Finance as part of adapting Ukrainian legislation to EU norms. The document also changes the criteria for classifying enterprises as micro, small, medium and large and provides for the transition of state-owned companies to international financial reporting standards.
For now, it is exactly a draft law: after approval by the government, it must be considered by the Verkhovna Rada.
What companies will have to disclose
The key change is the emergence of sustainability reporting. Companies will have to disclose information not only about financial results, but also about how their activities affect the environment and society.
In particular, the reporting will cover:
- the impact of the company's activities on the environment;
- respect for workers' rights and human rights;
- corporate governance;
- anti-corruption measures.
Reports will be prepared according to the European Sustainability Reporting Standards - ESRS. They will become a separate section of the management report and will be submitted in electronic format according to the relevant taxonomy.
This should make company data more suitable for automated analysis by investors, creditors, partners and government agencies.
New requirements will first affect the largest companies
Under the proposed rules, the obligation to prepare sustainability reporting will apply to large enterprises whose net turnover exceeds €450 million and average number of employees exceeds 1000.
2028 is set as the first year for which such companies must prepare the new reporting. The Ministry of Finance explains the transition period by the need to give businesses time to restructure systems for collecting and accounting non-financial data.
Business size criteria will be revised
The draft law also updates the financial indicators by which enterprises in Ukraine are classified as micro, small, medium and large. They are brought in line with current EU norms.
| Category | Balance sheet asset value | Net turnover |
|---|---|---|
| Microenterprises | up to €450 thousand | up to €900 thousand |
| Small enterprises | up to €5 million | up to €10 million |
| Medium enterprises | up to €25 million | up to €50 million |
| Large enterprises | over €25 million | over €50 million |
The criterion for the average number of employees remains unchanged.
The Ministry of Finance explains the revision of thresholds by the fact that due to inflation, companies can formally move to a larger category without real business scaling. This automatically entails more complex accounting and reporting requirements.
State-owned companies will be transferred to IFRS
Another important change concerns the public sector. State unitary enterprises and business entities in which the state owns more than 50% of shares or stakes will have to keep accounting and prepare financial statements according to international financial reporting standards - IFRS.
They are also required to prepare a management report.
The government expects that the transition to international standards will make the financial indicators of state-owned companies more understandable for foreign investors and creditors and increase transparency of the public sector.
The draft law was prepared as part of the implementation of the EU-Ukraine Association Agreement and adaptation to European legislation in the field of corporate reporting. Due to the formation of a new government, the document was re-approved by the Cabinet of Ministers and sent to the Verkhovna Rada.
According to: Ministry of Finance of Ukraine
