The European Commission Enlargement Report notes Ukraine's good progress in the negotiating chapters on Customs union and Taxation

On October 30, the European Commission published the Enlargement Package Reports 2024. It contains the European Commission's assessment of the progress made by the candidate and potential candidate countries. In particular, it refers to Ukraine's progress. 

As part of the EU Enlargement Package, the Report on the Annual Progress Report on Ukraine's preparation and progress towards the political and economic criteria for EU accession is presented. It also includes an assessment of the approximation of national legislation to EU acquis in accordance with all negotiated chapters. 

This Report is one of the documents that form the agenda of Ukraine's transformation on the way to EU membership. 

The Ministry of Finance of Ukraine is responsible for four chapters: Customs Union, Taxation, Financial Control and Financial and Budgetary Provisions. It is also co-responsible for 8 chapters, including Company Law, Economic and Monetary Policy, Statistics, and chapters related to the Rule of Law. 

Customs and Taxation have some of the highest scores among all the negotiating chapters. 

The report also notes Ukraine's “very good progress” in implementing reforms under the Ukraine Facility Plan, Macro-Financial Assistance from the EU, and the IMF's Extended Fund Facility. Meeting the conditions of these programs contributes to the sustainability of the country's financial and economic systems, as well as to attracting budget support from partners in the context of a full-scale war. 

The Report uses the following assessment scale to describe the state of play: early stage, some level of preparation, moderately prepared, good level of preparation and well advanced. To describe progress made during the reporting period, it uses the following scale: backsliding, no progress, limited progress, some progress, good progress and very good progress.

According to the Report, Ukraine has made the most progress in implementing reforms under the negotiating chapters of Cluster 3 Competitiveness and Inclusive Growth. In particular, one of the cluster's negotiating chapters that demonstrates a significant improvement compared to the last year's report is Taxation.

It is important to note that none of the European Commission's assessments contain data on Ukraine's regress.

• Customs Union

The customs area is one of the two negotiating chapters (along with the Foreign, Security and Defense Policy) that received the highest marks in the Report - good level of preparation and good progress. In addition, Ukraine also showed the highest level of progress in the Customs Union section compared to other EU candidate countries.

The European Commission has positively assessed the amendments to the Customs Code of Ukraine to further harmonize it with the Union Customs Code. In April 2024, the next version of the New Computerised Transit System (NCTS), Phase 5 (NCTS-P5), was successfully launched. Ukraine made progress in smoothening the application of authorised simplifications. As of August 2024, 54 economic operators were granted authorised economic operator (AEO) authorisations, as of today 64. Also in February 2024, the strategic plan for digitalisation of the State Customs Service was approved.

• Taxation

In the field of taxation, Ukraine has made good progress and has some level of preparation. 

The Tax Code has been amended to further align it with EU legislation. The report notes that the provisions of Ukrainian VAT law broadly correspond to the acquis. Excise taxation has been partially aligned with EU law. Work is ongoing in other areas, including direct taxation.

In 2024, Ukraine started the first automatic exchange of information on financial accounts.

• Financial Control

Ukraine is at the early stage of preparation for harmonization of financial control with the EU and has made limited progress in the field of internal control and external audit.

The European Commission proposes recommendations on necessary measures in this area for the next year. Ukraine continues to work on reforming internal control and external audit in accordance with international standards. In this context, the report did not take into account the changes in legislation adopted in recent months, in particular, in terms of the definition of the State Audit Service as an Anti-Fraud Coordination Office (AFCOS). 

• Financial and Budgetary Provisions

The harmonization of Ukrainian legislation with the EU in this section is at an early stage of preparation and has limited progress. 

The Report states that despite the limited progress with regard to the recommendation last year, Ukraine progressed in the underlying policy areas indirectly affecting the own resources system, in particular, in the areas of Customs Union, Taxation, Financial Control and Statistics.

The Report outlines both the achievements and the areas to be strengthened in 2025 as part of the European integration movement. The Ministry of Finance of Ukraine is committed to the reform process and the implementation of the recommendations of the European Commission for full accession to the EU.