On July 18, 2024, the Verkhovna Rada of Ukraine adopted in the second reading the draft law No. 11256-2 dated May 29, 2024, on amendments to the Tax Code of Ukraine regarding the implementation of the provisions of European Union law on excise tax. The Fuel and Energy Business Association cannot ignore this decision.

The draft law provides for a phased increase in excise tax rates on fuel to the levels stipulated by the EU Directive during the period from 2024 to 2028, starting from September 1, 2024. The goal is to bring Ukrainian legislation in line with EU standards, which is part of fulfilling the Association Agreement, establishing uniform excise tax rates as provided by Directive No. 2003/96/EC.

Many experts, including the Fuel and Energy Business Association, believe it is necessary to join the voice of society and business on this issue. There is justified concern about the impact of increasing excise tax rates on consumers.

«The increase in fuel prices due to changes in excise tax rates will affect the purchasing power of the population, increase the financial burden on enterprises already in difficult economic conditions due to the war: lack of human resources, loss of some equipment, and rising electricity costs. Therefore, the increase in excise tax may create additional negative impacts and, as a result, lead to business bankruptcies or higher prices for products for their end consumers,» notes the Association’s legal affairs council member Alina Potapovych.

The Association considers it unacceptable to place the entire burden of budget replenishment solely on citizens and businesses. In this case, a balance is needed between raising excise rates and its impact on consumers, and it is extremely important to start a dialogue between the authorities and businesses.

However, there is a slight chance that such an increase will not happen or will be postponed for a reasonable period. A draft resolution on the annulment of the second reading vote on draft law No. 11256-2 has been registered on the Verkhovna Rada’s website. This temporarily blocks its signing by the Speaker of the Verkhovna Rada and the President until a decision on this resolution is considered and adopted.