Ukraine’s Proposed Parcel Tax Vital to Secure Ongoing IMF Funding
By Yuliia Dysa
Ukraine’s Fiscal Reforms and IMF Programme: The Role of the Parcel Tax
Background: Ukraine’s Dependence on International Aid
KYIV, April 28 (Reuters) - Ukraine needs to adopt a law introducing a value-added tax on inexpensive parcels from abroad to ensure its $8.1 billion programme with the International Monetary Fund - due for review in June - remains on track, a source close to discussions said.
Kyiv depends on international aid to cover its budgetary needs and fund a war with Russia. Most of the multi-year funding programmes are conditional on Ukraine proceeding with governance reforms and changes to its fiscal legislation.
IMF Programme Details and Fiscal Expansion
The new IMF programme, approved in February, provides credibility for allies to proceed with their funding. It is due for a review in June to determine whether Ukraine is meeting its targets. The fund is pressing Ukraine to expand its fiscal base.
The Importance of the Parcel Tax
"Parcels have now become one of the key issues," the source said. "Without adopting this law, there may be no review, with all the negative consequences that would entail."
If the IMF programme goes off track, Ukraine will not be able to receive money from the European Commission, the source added.
Current Parcel Tax Policy and Proposed Changes
Currently, parcels containing goods worth less than 150 euros ($175.54) are not subject to VAT in Ukraine. Introducing the tax would generate around 10 billion hryvnias ($227.53 million) annually, the finance ministry said.
A draft law was submitted to parliament but was not debated due to a lack of support among legislators.
Implications for Ukrainian Citizens
The ministry said the proposal will not make it harder for Ukrainians to send and receive parcels from abroad.
Exemptions and Timeline
Non-commercial parcels worth less than 45 euros will not be taxed, it added. The VAT will not be rolled out before 2027.
Parliamentary Resistance and Ongoing Negotiations
Parliament recently balked at adopting several laws critical for much-needed international funding, including a proposal to introduce VAT for self-employed individuals - one of the benchmarks set by the IMF.
Many lawmakers said they would not support the unpopular measure. This forced the government to return to negotiations with the IMF.
Government and IMF Discussions
Following talks with IMF officials in Washington in mid-April, Prime Minister Yulia Svyrydenko said there was an agreement that the introduction of the tax was "not constructive." Ukraine will seek alternatives, she added.
Future Outlook
"The issue ... is difficult to adopt in 2026 and may be postponed to a later date," the source said, adding that talks on the matter are ongoing.
Exchange Rates
($1 = 0.8547 euros)
($1 = 43.9507 hryvnias)
(Reporting by Yuliia Dysa; Editing by Daniel Flynn and Thomas Derpinghaus)
