2022-03-12T14:53:00+02:00 Economy 2024-09-15T07:42:38+03:00

Ukrainian news

Cabinet Proposes Rada Cancel Excise Tax On Fuel And Reduce VAT Rate From 20% To 7%

Cabinet Proposes Rada Cancel Excise Tax On Fuel And Reduce VAT Rate From 20% To 7%

The Cabinet of Ministers proposes the Verkhovna Rada abolish the excise tax on fuel and reduce the rate of value added tax (VAT) from 20% to 7%.

First Vice Prime Minister - Minister of Economy Yuliya Svyrydenko wrote about this on Facebook, Ukrainian News Agency reports.

According to her, at a government meeting on March 11, two decisions were made that will help avoid a shortage of fuel at gas stations and curb the growth of its price as much as possible.

"We have approved amendments to the formula by which we calculate the maximum allowed price of fuel at gas stations - we have increased the price of logistics and the surcharge to quotations in North-Western Europe (NWE). This will allow filling station chains to include in the calculation additional costs incurred after the reorientation of supplies from Belarus and Russia to the western border of Ukraine (Poland, Romania, Hungary). An increase in the formula gives an economic incentive to the networks to import more fuel (according to the calculation formula, which was adequate to the war, it is now unprofitable to transport oil products to the networks). At the same time, such a decision would lead to an increase in the price which the government cannot allow, because fuel is a socially important commodity," Svyrydenko wrote.

According to her, the Cabinet of Ministers also submitted a bill to the Verkhovna Rada to abolish the excise tax on fuel and reduce the VAT rate from 20% to 7%.

"This significantly reduces the amount of taxes that previously amounted to more than half the price. Both decisions will come into force simultaneously. We will apply the new formula as soon as the Verkhovna Rada votes for lowering taxes. As a result, the networks will deliver more fuel, and the price will not increase. A similar decision on taxes has already been adopted in Poland and other EU countries. We will continue to closely monitor the situation on the global fuel market and will adjust the price of logistics and the amount of the surcharge to the quotation (premium) as soon as they decrease. The mark-up of Ukrainian gas station networks will not increase and will remain at the level set a few days before the start of the Russian invasion: UAH 4.55 per liter of gasoline and UAH 5 per liter of diesel fuel," Svyrydenko said.

As Ukrainian News Agency earlier reported, in early March, the Ministry of Economy set the maximum price for gasoline (including the maximum mark-up) at UAH 38.34 per liter, and for diesel fuel at UAH 35.92 per liter.

The Oil and Gas Association of Ukraine proposes to the government to reduce VAT on fuel from 20% to 7%, modernize excise rates on it and leave the current marginal mark-up for gasoline and diesel fuel in order to make fuel prices more affordable.