Parliament adopted the alignment of excise tax rates to the EU minimum level in 2028

In times of war, every hryvnia directed to the State Budget is an essential resource for maintaining and strengthening the country's defence capability. Today, Ukrainians fund the Armed Forces of Ukraine with their taxes. The Government finances the defence and security sector expenditures using only domestic tax revenues and War Bonds.

Therefore, to provide additional funding, on 18 July, the Parliament of Ukraine adopted the Law "On Amendments to the Tax Code of Ukraine on Alignment of Ukrainian Legislation with the Legislation of the European Union in the Part of Excise Tax".

Aligning excise taxes with EU legislation is one of the fiscal measures under the IMF's Extended Fund Facility Arrangement aimed at ensuring financial stability, reducing risks, and achieving EU accession goals. Implementation of measures and policies defined in cooperation with the IMF allows attracting funding from both the IMF and other donors for priority social and humanitarian budget expenditures.

The Law provides for:

- bringing the classification of alcoholic beverages in line with the provisions of EU Council Directive 92/83/EEC in terms of the definition of the term intermediate products - wines and other fermented beverages, which are classified under codes 2204, 2205, 2206 according to the Ukrainian Classification of Goods for Foreign Economic Activity 

- increase of the excise tax rate for intermediate products from UAH 8.42 to UAH 12.23 per 1 litre (by UAH 3.81), i.e. to the level of the current rate for sparkling wines;

- amending the Tax Code of Ukraine to introduce a gradual increase in the excise tax rate on fuel over 4 years until it reaches the minimum level set by the European Union in view of Ukraine's European integration commitments.

Timetable for increasing excise tax on fuel (EUR per 1000 litres):

Such amendments to the Tax Code of Ukraine will increase the revenues of the State Budget of Ukraine from fuel operations by approximately UAH 2.5 billion per month in September-December 2024, including UAH 2.1 billion in excise tax and UAH 0.4 billion in VAT. The increase in the price of 1 litre of fuel will remain insignificant for end consumers (2 to 3%).

This Law will also provide additional revenues to the State Budget from the sale of intermediate products - by UAH 4.5 million per month from excise tax (calculated based on the sales volumes envisaged in the State Budget of Ukraine for 2024).

This is important for maintaining the country's security, as the revenues are directed to the defence and security sector.

The law comes into force after being signed by the President of Ukraine.