Experts interviewed by Glavred are convinced that the approach proposed by the deputies can bring not only benefits, but also significant harm.
The parliament proposes to abolish the limit on parcels from abroad that are not subject to taxation. The authors of the bill motivate this by protecting Ukrainian producers, but the opinions of experts interviewed by Glavred are divided, as they also see future corruption risks in the document.
Parcels from abroad will become more expensive – what is proposed in the Rada
According to current legislation, parcels and goods worth up to 150 euros sent from abroad are currently not taxed. That is, in the case of an order in an online store abroad, 20% VAT and 10% import duty must be paid only if the value of the parcel exceeds the duty-free threshold. The same applies to parcels that come from one individual to another.
Bill No. 12429, submitted by a number of MPs, abolishes these requirements. That is, now 20% VAT is proposed to be applied to all international shipments worth up to 150 euros. If the parcel exceeds this amount, then in addition to VAT, a 10% duty will have to be paid.
The exception will be goods and parcels worth up to 45 euros, provided that such goods are sent to their address by individuals without any payment and without commercial purpose. However, there are a number of exceptions here too – a tax of 20% VAT will still have to be paid even on a private parcel worth up to 45 euros if the parcel contains:
- perfumes in a volume of more than 50 grams or toilet water in a volume of more than 0.25 liters;
- coffee in a volume of more than 500 grams;
- coffee extracts and essences in a volume of more than 200 grams;
- tea in a volume of more than 100 grams;
- tea extracts and essences in a volume of more than 40 grams;
- excisable goods (alcohol or tobacco products, etc.).
In addition to tax innovations for shipments, the draft law also adds another operation for VAT taxation – distance selling of goods. In particular, the tax in this case must be paid by a non-resident person who delivers goods to Ukraine from outside another country.
By analogy with EU Council Directive No. 2006/112/EC, it is proposed to equate persons who facilitate sales through online platforms, portals and websites with persons who carry out distance selling of goods.
What does business think about the initiative
As noted by one of the co-authors of the bill, the head of the Finance Committee of the Verkhovna Rada of Ukraine, Danylo Getmantsev, the document, the text of which was submitted to parliament, was developed by a number of Ukrainian business associations.
“Payment of VAT by the supplier of goods or the marketplace will eliminate the need for additional customs payments by the buyer during customs clearance and will help speed up customs procedures,” he noted.
Hetmantsev also published letters from business associations in support of this. In particular, as stated in the letter from the American Chamber of Commerce in Ukraine, exemption from VAT when importing goods in small batches causes a significant shortfall in revenue for the State Budget of Ukraine.
“Based on data on the cost of postal items and international express items for 9 months of 2024 and the projected volumes of such items in the IV quarter of 2024 at the level of the III quarter, additional revenues from value-added tax in 2024, if the tax exemption for parcels worth up to 150 euros is canceled, could amount to UAH 11.8 billion. In the long term, if no measures are taken now, those trade entities that pay taxes in Ukraine, create jobs and help the Armed Forces of Ukraine will be displaced by those that do not make any payments or other positive impacts on the economy of Ukraine,” the organization’s letter states.
However, among business representatives, opinions on a possible increase in taxation differ significantly. As noted by the co-owner of Nova Poshta Volodymyr Popereshnyuk, restrictions on imports and imposition of duties primarily affect domestic manufacturers.
“If we want to protect domestic producers, make them competitive in world markets, we must create for them the best business conditions in the world – namely, deregulate and reduce taxes and duties to a minimum, if not remove them altogether,” the entrepreneur believes.
A win for producers or a risk of smuggling?
Experts interviewed by Glavred are convinced that the approach proposed by the deputies can bring not only benefits, but also significant harm.
According to economist Borys Kushniruk, if the bill is adopted, the cost of delivering and clearing parcels from abroad will increase by at least a third (20% VAT + 10% customs clearance).
However, according to him, this step is necessary, because when foreign products are not subject to VAT, domestic products automatically become 20% more expensive, and therefore automatically become uncompetitive relative to foreign products.
“In this case, we lose twice. We do not receive tax from imports, and we kill our own producer, and therefore, we do not receive taxes from the production of Ukrainian products. Therefore, the task here is twofold. First, filling the state budget. It will be less
“… than if you just mechanically calculate how much import has come in. Because as soon as this tax is introduced, it is obvious that some of the import will become unprofitable for import, and it will simply be stopped. Secondly, equalizing conditions for domestic producers and producers of foreign products. There cannot be such a situation when one’s own production is put in worse conditions than imports. This is a priori wrong,” Kushniruk notes.
However, according to independent expert, Candidate of Economic Sciences Oleksandr Khmelevsky, instead of focusing on taxing big business, which evades paying taxes by large amounts, the authorities decided to focus on taxing ordinary Ukrainians.
“Such an approach will not significantly increase revenues to the State Budget, but will divert considerable resources of the Tax Service and increase the costs of tax administration. If such a bill is adopted, prices for goods ordered online will increase. Companies that ordered goods from abroad in small batches and resold them in Ukraine will actually lose their business. Postal operators will also suffer. The costs of processing parcels will increase, and additional employees will have to be hired,” Khmelevsky noted. In addition, the bill, according to the expert, may contribute to an increase in the level of smuggling.
His opinion is shared by Yuriy Gavrilechko, a candidate of science in public administration.
“Taxing parcels is a direct path to an increase in smuggling and an increase in the cost of a mass of small household goods in Ukraine. All the talk about someone using it for production is not true. Let’s turn to the calculations. According to the relevant committee of the Rada, the Ukrainian budget does not receive about 7-9 billion hryvnias from the taxation of parcels every year. For the most part, they are trying to extract VAT there, which means that about 1 billion dollars of goods are imported. This is 1.3% of the total import volume, which last year amounted to about $71 billion. The main volume of parcels is finished products or components that are not manufactured in Ukraine. They are used by end consumers, and not for resale. Who in their right mind would buy something here for three times more expensive if they can order it abroad?”, – the expert is convinced.
At the same time, according to the founder and managing partner of the GLS law company Olga Cherevko, the initiative also has its drawbacks.
“First of all, it creates an additional financial burden on citizens who are used to ordering goods from abroad. Additional taxes can significantly affect family budgets. It also reduces the availability of quality goods, because many of them are better or cheaper abroad even taking into account delivery. It is also important to take into account administrative difficulties: the introduction of a tax can complicate the process of receiving parcels due to the need to fill out additional documents or pay VAT. “This may scare away buyers,” Cherevko noted.
She added that despite the potential positive aspects of this initiative, it is important that its implementation is transparent and as convenient as possible for citizens. In particular, to mitigate the negative impact, the state may consider compensation mechanisms or introduce an adaptation period.
