EU warns Ukraine may miss €3.7 billion tranche without parcels VAT law
The European Commission has said Ukraine will not receive a €3.7 billion EU macro-financial assistance tranche planned for early autumn unless it adopts a law removing the VAT exemption for imported low-value parcels. On 1 September the Verkhovna Rada failed to pass the relevant draft laws, falling short of the votes needed. The parcels legislation is one of 12 conditions of the EU program and one of four IMF-required tax bills.
Key points
- The European Commission says Ukraine risks not receiving a €3.7 billion MFA tranche if it does not adopt the parcels VAT law.
- The €3.7 billion tranche is planned for disbursement in early autumn.
- The parcels VAT law is one of 12 conditions of the EU macro-financial assistance program.
- On 1 September the Verkhovna Rada voted on draft laws on VAT for parcels up to €150; 194 MPs voted in favor, 32 short of the required number.
- The Verkhovna Rada did not support draft law No. 15460 on customs procedures for taxing imported low-value parcels, nor draft law No. 15112-d and alternative bills on cancelling the VAT exemption for international postal shipments up to €150.
- The 2026 MFA target is €8.35 billion, of which the EU has disbursed €3.2 billion.
- The same parcels law is one of four tax bills the IMF requires for continuation of its program.
Why it matters
A €3.7 billion EU disbursement to Ukraine is being conditioned on adoption of a specific domestic tax law. The parcels VAT bill is one of 12 conditions of the EU macro-financial assistance program and also one of four IMF-required tax bills, so failure to pass it puts both EU and IMF support at risk. The 1 September defeat in the Verkhovna Rada leaves the condition unmet shortly before the autumn disbursement window.
What happened
The European Commission warned on 2 September that Ukraine will not receive a €3.7 billion tranche of EU macro-financial assistance planned for early autumn unless it adopts a law removing the VAT exemption for imported low-value parcels. Commission spokesperson Balázs Ujvári said adoption of the law is required to continue MFA payments and that it plays a significant role in mobilizing revenues for the Ukrainian budget. The warning came a day after the Verkhovna Rada, Ukraine's parliament, failed on 1 September to pass the relevant legislation: 194 MPs voted in favor of a bill on VAT for parcels up to €150 purchased on foreign marketplaces, 32 votes short of the required number. The Rada also did not support draft law No. 15460, which would have regulated customs procedures for taxing imported low-value parcels, nor draft law No. 15112-d and alternative bills on cancelling the VAT exemption for international postal shipments up to €150. The 2026 MFA target is €8.35 billion, of which the EU has already disbursed €3.2 billion.
Background
The 2026 target disbursement under the MFA program is €8.35 billion, of which the EU has already paid €3.2 billion. A previous attempt on 26 May to cancel the VAT exemption for imported low-value parcels (up to €150) also failed. Since 1 July, European duties of €3 per parcel valued at up to €150 have been in effect. In April MPs adopted one of the four IMF-required tax bills, extending the 5% military levy for three years after the war. Draft law No. 15111-d on taxing digital platforms (the 'OLX tax') has been supported in first reading. From 1 October Moldova will begin charging 20% VAT on purchases up to €150 on international online platforms.