Government approves Customs Law to reform taxation of international parcels

On 29 July, the Cabinet of Ministers approved a draft law developed by the Ministry of Finance introducing amendments to the Customs Code regarding the taxation of international parcels. The bill will shortly be submitted to the Verkhovna Rada of Ukraine for consideration.

The Government’s draft law forms part of a legislative package together with the main Draft Law No. 15112-d amending the Tax Code, which is currently under consideration by the Verkhovna Rada.

Together, the two documents establish a comprehensive legal framework for introducing a modern European model for taxing distance sales of goods in Ukraine.

The new bill incorporates the results of consultations and preserves all agreed decisions and approaches developed through an active dialogue with Members of Parliament, businesses, postal operators and express carriers.

How will the new taxation system work?

The key element of the reform is the introduction of VAT on imported goods purchased through online marketplaces, regardless of their value. Currently, parcels valued at up to EUR 150 are exempt from VAT.

The Government-approved bill establishes the customs and technical mechanisms required to implement the reform, making the new system as convenient and seamless as possible for consumers:

• Responsibility of marketplaces: the obligation to calculate and pay VAT will rest with the online marketplaces themselves – electronic interfaces – or their intermediaries, rather than with Ukrainian consumers;

• Customs declarations: goods sold remotely and delivered by post or express shipment will be declared by postal operators or express carriers on the basis of special registers. Specific rules will also apply to the exchange rates used for calculating the tax;

• Registration and guarantees: registration requirements will be introduced for marketplaces, their representatives in Ukraine – in the case of non-resident marketplaces – as well as a special guarantee required to use the distance-sales scheme;

• Penalty-free transition period: a transition period will be provided to allow postal operators, express carriers and marketplaces to adapt. During the first year, no administrative penalties will apply for unintentional errors involving incomplete or late VAT payments on parcels valued at up to EUR 150, provided that the full amount of tax is subsequently paid.

Why is the reform necessary?

The current system of tax exemptions for foreign online sellers creates unequal conditions for Ukrainian businesses and constrains the development of domestic production.

The reform is expected to generate approximately UAH 10 billion in additional annual revenue for the State Budget of Ukraine. Adoption of the legislative package will also be an important step towards aligning Ukrainian legislation with EU law and constitutes one of the structural benchmarks under Ukraine’s Memorandum with the IMF.

The new distance-selling rules are expected to take effect no earlier than 1 January 2027. Their entry into force will be subject to a separate Government decision confirming that all relevant stakeholders are ready to implement the new taxation model, including the necessary IT systems.

As previously reported, leading Ukrainian business associations support the abolition of preferential taxation for international parcels. They emphasise that the current system creates an uneven playing field for domestic producers and results in multibillion-hryvnia losses for the State Budget.

Public attitudes

According to a survey conducted by Info Sapiens, more than half of Ukrainians – 52% to 54% – support the introduction of equal taxation rules for Ukrainian retailers and foreign online marketplaces.

Respondents identified the main benefits of the reform as additional budget revenue (59%), support for legitimate Ukrainian businesses (58%), a level playing field for competition (56%), a reduction in undeclared imports (52%), and closer alignment of Ukrainian rules with EU practices (51%).

At the same time, citizens expect the new system to be simple and easy to understand (37%), without requiring manual additional payments (28%) or involving hidden charges (27%).