Taxation of international parcels: The Parliament adopted a package of draft laws

On October 15, the Parliament of Ukraine adopted in the second reading and as a whole a package of draft laws regarding the taxation of international postal and express shipments:

• No. 16051-1 – on amending the Tax Code of Ukraine regarding the specifics of VAT taxation of distance sales of goods;

• No. 15460 – on amending the Customs Code of Ukraine regarding the specifics of customs formalities for such goods.

"The draft laws adopted today form a modern model of e-commerce taxation that meets the approaches of the European Union and is fair to domestic business. The reform is also part of the cooperation program with the IMF and a condition for EU macro-financial support. Its timely adoption opens the way to receiving the next tranche of international financial support for the needs of the state budget. I thank the Members of Parliament for supporting this important decision and for working together on the reform, which strengthens the resilience of public finances and brings Ukraine closer to European rules. The Ministry of Finance, together with the State Customs Service, in close cooperation with logistics market operators, will make this service as convenient as possible for citizens," said Minister of Finance of Ukraine Sergii Marchenko.

Changes envisaged by the draft laws:

• Special rules will be introduced for the taxation of distance sales of goods via marketplaces if their total invoice value does not exceed 150 euros;

• VAT on the import of goods in international postal and express shipments will be applied starting from 0 euros;

• The obligation to calculate and pay VAT to the budget will be placed on the marketplace (electronic interface enterprise). If the marketplace is a non-resident, it must appoint an intermediary in Ukraine who will be jointly and severally liable for settlements with the budget. It is permitted to appoint several intermediaries;

• VAT (20%) will be automatically included in the price of the goods during purchase on the marketplace platform. The process of receiving the parcel will not change;

• The possibility of exemption from VAT taxation will be provided for goods for security and defense purposes, including by refunding the paid VAT to an individual who purchased such goods according to the rules for the distance sale of goods;

• The VAT exemption for non-commercial parcels worth up to 45 euros is maintained;

• The VAT exemption for goods in unaccompanied baggage up to 150 euros (personal belongings or goods that a person transports across the customs border separately from themselves, i.e., without being present with the cargo) is maintained.

The draft law provides for directing VAT revenues from distance sales of goods moved (forwarded) across the customs border of Ukraine in international postal and express shipments to a special fund of the State Budget of Ukraine to meet the needs of the Armed Forces of Ukraine.

The next step will be the President of Ukraine's signing of the adopted laws, after which preparations for their practical implementation will begin.

The new rules will enter into force no earlier than July 2027.

It is expected that the new model will provide about UAH 10 billion in additional revenues annually.

The reform is also intended to ensure equal competitive conditions for Ukrainian and foreign businesses and bring Ukrainian e-commerce taxation rules closer to European approaches, specifically providing for the use of a Ukrainian analogue of the European IOSS system.