The Cabinet of Ministers of Ukraine is considering raising the standard value-added tax (VAT) rate from the current 20% to 21–21.5%. The additional revenues will be directed to a special fund to support businesses amid increased Russian shelling.
The Cabinet of Ministers of Ukraine is considering raising the standard value-added tax (VAT) rate from the current 20% to 21–21.5%. The additional revenues will be directed to a special fund to support businesses amid increased Russian shelling.
This was reported by Forbes Ukraine, citing sources in the government and the Verkhovna Rada.
During the meeting "From Relocation to Development: How to Strengthen Support for Relocated Businesses" on September 11, Economy Minister Oleksandr Kravchenko announced a number of support programs designed until the first quarter of 2027. Among them:
preferential financing for retail;
inclusion of Kyiv and the region in high-risk areas (for expanded insurance against military risks);
expansion of the "5/7/9" credit program.
The total need for financing these initiatives is UAH 6 billion. The Ministry of Finance noted that current budget funds are insufficient, and they are able to allocate only about UAH 2 billion. In this regard, the Ministry of Economy is working on alternative sources of funding.
According to analysts' calculations, the VAT increase will have the following effect on the budget:
+1 percentage point (up to 21%): about 50 billion UAH additionally per year;
+1.5 percentage points (up to 21.5%): about 75 billion UAH additional per year.
The funds collected will have a strictly targeted purpose — they will not go to the general budget, but to direct assistance to affected enterprises or to insure war risks.
There are no plans to implement the tax increase immediately, as this initiative is at the discussion stage and may face difficulties in passing through parliament.
The Ministry of Finance proposes to focus on finding international financing. However, attracting donor funds is becoming increasingly difficult: as of August, the Rada and the government have blocked the implementation of about 36 reforms under the IMF, World Bank, and Ukraine Facility programs, which deprives the budget of a potential 8 billion euros (about 410 billion UAH).
The launch of a special fund to cover the first layer of losses (First-loss) is scheduled for January 2027. It will be administered by the Export Credit Agency (ECA).
Main parameters of the fund:
the total amount could be $3–4 billion ($1 billion — state funding, $2–3 billion — donor funds);
maximum compensation — up to $10 million per legal entity (damages to critical fixed assets will be covered);
Another source of funding for the fund should be business contributions — 2% of the coverage amount (for example, $200,000 to obtain a maximum limit of $10 million);
Large, medium and small businesses in certain sectors will be able to receive compensation: processing and extractive industries, agricultural sector, transport, energy, water supply, healthcare, education and trade.
