In 2026, Ukraine’s fuel market has reached a tipping point where tax policy is no longer just a tool for filling the budget—it effectively determines whether that budget will remain fillable at all. At the state level, the current model appears to be an attempt to ensure fiscal stability. At the business level, it increasingly looks like an illusion of control that ignores the real economics of the industry.
As a representative of the industry, I see daily how decisions that seem logical from an administrative standpoint become a matter of survival for individual gas stations. The fuel sector is indeed one of the most transparent and controlled. This was the rationale behind the monthly advance corporate income tax payments for retail operators—a way to ensure a guaranteed cash flow to the state.

The Real Math Behind the “Fixed” Approach
Economics, however, is more complex than formal frameworks. A problem arises when a tax ceases to be a function of business activity and begins to exist independently of it.
Today, a single gas station contributes at least 720,000 UAH per year to the budget in advance payments alone. Add to that approximately 690,000 UAH per year in payroll taxes. Together, this creates a base fiscal effect of over 1.4 million UAH per station, excluding VAT and excise duties.
But these figures have a flip side:

• If a station stops operating, the state loses this resource entirely.
• If 100 stations close, that is a loss of at least 141 million UAH per year.
• If 200 stations close, the loss exceeds 282 million UAH.

This is a classic case where the drive to maximize revenue “here and now” begins to undermine the budget in the medium term.

The VAT Factor: The Real Revenue Generator
Often overlooked in this discussion is Value Added Tax (VAT), the primary source of fiscal revenue from the fuel market. Unlike advance payments, VAT depends directly on sales volume. Every liter sold generates tax revenue. Consequently, any market contraction—whether through station closures or falling consumption—automatically triggers a drop in VAT receipts.
With an annual consumption of roughly 9 billion liters of gasoline and diesel, and VAT making up 10–15 UAH per liter, the fuel market generates tens of billions of hryvnias every year. The danger is that fixed tax pressure leads to a loss of the very sales volumes that form the core of state revenue.

SMEs and the European Alternative
For major chains, a fixed payment is just a line item in a financial model. For small and medium-sized enterprises (SMEs), especially in frontline or sparsely populated regions, it is a drain on liquidity that ignores demand, security, and actual financial results. It shifts the question from profitability to a binary choice: stay open or shut down.
If we look at the European Union in 2025–2026, we see a fundamentally different approach to similar price shocks:

• Poland: The government temporarily reduced VAT and excise duties, lowering prices by €0.25–0.30 per liter. This was a conscious decision to redistribute resources from the budget back into the economy to maintain demand.
• Italy: Used a combination of excise cuts and tax credits for businesses.
• France: Implemented targeted support, including deferred tax payments and credit programs.
  The common thread? An understanding that tax policy should support economic activity, not replace it.

FEBA’s Strategic Proposal
In Ukraine, a budget loss of 280 million UAH isn’t just a number. It represents approximately 4,700 monthly paymentsto service members or over 14,000 monthly salaries for educators. Therefore, the tax burden on the fuel market is a matter of national economic security.
The Fuel and Energy Business Association (FEBA) proposes a more balanced model to ensure resources are generated tomorrow, not just extracted today:

• Differentiation: Adjusting advance payments based on sales volumes and regional location.
• Operational Linkage: Tying the obligation to pay to the actual start of business activity.
• “Tax Pause” Mechanism: Allowing non-operational stations to suspend payments.
• Proportional Sanctions: A more flexible approach to penalties.
• VAT as an Anti-Crisis Tool: Considering temporary VAT adjustments on fuel, based on EU practices, to stabilize the economy.
• Scenario Modeling: Analyzing how VAT adjustments impact prices, consumption, and long-term budget revenue.

The Bottom Line
We face a choice: follow a short-sighted logic and gradually lose the market along with its taxpayers, or build a system that allows businesses to operate and, consequently, pay taxes sustainably.
As Deputy Head of FEBA, I am convinced the second approach is the only viable one for 2026. We have already submitted our comprehensive analytics and proposals to state stakeholders and relevant authorities.
 
Tetiana Dumenkova 
Deputy Head of the Fuel and Energy Business Association (FEBA)