Ukraine may seek exception to EU’s 15% minium VAT rate during accession period
As Ukraine plans its long-term aim to join the European Union, it has been reviewing how to comply with the 15% minimum standard VAT rate requirement of the EU’s VAT regime. Currently, Uktaine’s rate is 20%, but it is reviewing a cut to 10% to help the economy recover following the Russian invasion.
Ukraine was granted European Union candidate status on June 24 2022. Aside from first having to resolve the outcome of the Russian invasion, there remain many other area of regulation and law that remain to be negotiated which will inevitably take many years.
The Economic Affairs department has said it is looking at two solutions for an accession period which the EU appears open to:
- Limit the rate reduction to the transition period of accession.
- Introduce further reduced rates for a broad range of essential supplies. Currently there is only a 7% reduced rate for certain supplies.
EU 15% minimum VAT rate
The EU adopted permanently the minimum 15% standard VAT rate in 2018 to prevent excessive divergence and competition on taxes. A 15% minimum standard rate has been maintained on a provisional basis since VAT rules for the EU single market were first applied in 1993.
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