Ukraine plans war-risk insurance fund for businesses, financed by VAT hike

Why it matters

The proposal would create Ukraine's first dedicated war-risk insurance mechanism for businesses, filling a gap left by existing damage compensation and the 5-7-9% lending program, which the minister says do not adequately serve large enterprises. With business losses estimated at around $10 billion, the fund addresses a significant unmet need, but it would be financed through a tax increase that links wartime economic recovery directly to higher costs for businesses and consumers. The planned involvement of private insurers could reshape Ukraine's insurance market, and the January 2027 target makes this a medium-term policy project rather than an immediate relief measure.

What happened

Minister of Economy Oleksandr Kravchenko outlined plans for a government-backed war-risk insurance fund at a meeting with journalists. Under the proposal, businesses would receive up to $10 million per company group to cover the first loss from a Russian attack, with an insurance premium of 2% of insured asset value within the established compensation limit. Private insurance companies would participate in delivering the product, payouts would begin on January 1, 2027 if funding is secured, and the fund would operate throughout Ukraine. The fund's capital is planned at $2–3 billion.

The ministry considers raising VAT from 20% to 21% — a 1-percentage-point increase — the most acceptable funding option, though alternatives such as a temporary import duty or roughly doubling existing import duties are also under discussion. According to the ministry, without state support and a tax increase, the required insurance contribution would exceed 20% of asset value, which it considers unaffordable for businesses. The government has not made a final decision on the tax changes.

Separately, on September 1 the Verkhovna Rada failed to adopt two bills needed to levy VAT on international parcels valued at up to €150 — a step required to unlock a $0.7 billion IMF program tranche and a €3.7 billion EU macro-financial assistance tranche under the €90 billion Ukraine Support Loan. Prime Minister Serhiy Koretsky said the government is imposing a strict economy regime on non-defense budget funds.

How Ukrainian sources describe it

All three reporting outlets are Ukrainian-language domestic media, and their coverage focuses on the domestic policy detail: the proposed VAT mechanics, insurance parameters, timelines and the estimated scale of business damages. The framing centers Minister Kravchenko's announcements and presents the insurance fund as a direct response to the scale of Russian-attack losses for Ukrainian businesses.

Where reporting differs

Sources differ on the year for the projected $10 billion in business losses from Russian attacks: one fact places the estimate in 2025, another in 2026, and a third does not specify the year. There is also a minor framing difference on the VAT increase — one source describes it simply as 'by 1%', while another specifies it as a 1-percentage-point rise from 20% to 21%.

Background

Existing state support — damage compensation and the 5-7-9% preferential lending program — is focused on small and medium businesses and is described as insufficient for large enterprises. The Ministry of Economy estimates that without state subsidies or tax changes, the required insurance contribution would exceed 20% of asset value, which it considers unaffordable. The government has not made a final decision: the VAT increase and alternatives such as a temporary or doubled import duty remain under discussion. Prime Minister Serhiy Koretsky has separately said the government is imposing a strict economy regime on non-defense budget funds, and on September 1 the Verkhovna Rada failed to adopt two bills needed to levy VAT on international parcels up to €150 — a step required to unlock IMF and EU financial tranches.