Ministry of Infrastructure proposed to partially return excise duties on diesel and gasoline

The Cabinet of Ministers supported a draft law on changes to the Tax Code of Ukraine, which provides for a partial return of fuel excise rates that had been in effect before the full-scale invasion.

In March, the Verkhovna Rada of Ukraine canceled the collection of excise taxes on fuel. This decision was due to the acute crisis in the fuel market of Ukraine, caused by the global fuel crisis and russia's attacks on the infrastructure for storing and transporting energy carriers.

Since July, the situation on the fuel market has stabilized. To this end, measures were introduced to simplify fuel logistics, conditions were ensured for large long-term contracts for both businesses and the public sector.

The Ministry of Infrastructure has initiated a partial refund of excise duty rates on gasoline and diesel at the level of €100/1,000 liters. Before the full-scale invasion, the rates for petrol and diesel were €213.5 and €139.5 respectively, which is almost two and a half times higher.

In the European Union, the minimum level of excise duty is established by Directive 2003/96/EU, and currently the minimum excise duty rate on gasoline according to it is €359 per 1000 liters.

Thus, the proposed rates are lower than those that are mandatory for EU member states. For example, in Germany, the excise tax on gasoline is €654.5, in Poland - €276.8, in Romania - €373.3, and in Slovakia - €555.

Meanwhile, the preferential tax on added value for fuel remains at the level of 7%. Until March of this year, the rate of VAT on fuel was 20%.

"Abolishing the excise duty was a forced and timely decision, which, among other things, helped to stabilize the situation on the fuel market. Market players have now adapted and we can return to the normal functioning of fiscal instruments. Under our proposal, the excise duty rates are significantly lower than those in effect prior to the full-scale invasion. In addition, the current reduced VAT rate from 20% to 7% is maintained. We are grateful to our international partners for the monthly support of the state budget, due to which salaries and pensions are paid. At the same time, the maintenance and rapid restoration of the destroyed infrastructure remains a direct responsibility of the state. The excise tax, albeit in a reduced form, will allow for minimal repairs, primarily of bridges, and will improve the liquidity of the entire financial system of the state," commented the Minister of Infrastructure of Ukraine Oleksandr Kubrakov.

According to the calculations of the Ministry of Infrastructure, the partial return of excise duties on diesel and gasoline against the background of lower prices for oil products on world markets will have a minimal impact on retail value.