Parliament approves gradual approximation of excise tax rates to the EU minimum level in 2028

In times of war, every hryvnia paid to the state budget becomes an important resource for maintaining and strengthening the country's defense capabilities. Today, Ukrainians finance the Armed Forces of Ukraine with their taxes. The Government finances the security and defense sector expenditures exclusively at the expense of its own tax revenues and military bonds.

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

Bringing excise taxes in line with EU legislation is one of the fiscal measures under the IMF's Extended Fund Facility program to ensure financial stability, contain risks and achieve 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 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 liter (by UAH 3.81 ), i.e. to the level of the current rate for sparkling wines and carbonated wines;

- amending the Tax Code to introduce a gradual increase in excise tax rates on fuel over 4 years until the minimum level in the European Union is reached, taking into account the European integration obligations of our country.

Schedule of increase in excise tax rates on fuel (euros per 1000 liters):

Such amendments to the Tax Code of Ukraine will increase revenues to the State Budget of Ukraine from fuel sales 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 liter of fuel will not be noticeable for end consumers (from 2 to 3%).

The new 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 security and defense sector.

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