The Verkhovna Rada registered draft law No. 7668-3 about amendments to the Tax Code of Ukraine on adaptation of the level of fuel taxation to the requirements of the European energy directive.
The document provides for the establishment of a uniform rate of excise tax on motor gasoline, diesel fuel and liquefied gas in the amount of €100 per 1,000 liters for the period until the termination or cancellation of the state of emergency, which will increase the cost of fuel to 5 hryvnias per 1 liter, depending on the region, reports Verkhovna Rada.
The Government explains this initiative by the need to restore revenues from the State Road Fund to finance road works, in particular, emergency restoration works after destruction and damage as a result of armed aggression of the russian federation.
In the material, it was explained that during the 5 months of zero fuel rates, prices at gas stations increased by almost 45%, domestic oil refineries did not resume their work, fuel supply logistics chains are not fully established, and already operating supply chains are much more expensive.
"Ukraine, as an official candidate for EU membership, will be obliged to gradually adapt its own legislation to EU legislation. In this regard, the development of the fuel excise tax system must be based on European legislation, the basis of which in the field of energy products is Council Directive 2003/96/EC of October 27, 2003 "On the restructuring of the Community system of taxation of energy products and electricity" and the Directive 2014/94/EU of October 22, 2014 "On the deployment of infrastructure for alternative types of fuel", says the explanatory note to the draft law.
Directive 2003/96/EC provides for a minimum level of excise duty for gasoline set at €359 per 1,000 liters, for diesel fuel at €330 per 1,000 liters, and for liquefied gas at €68 per 1,000 liters. However, the document allows member states under fiscal control to fully or partially exempt or reduce the level of taxation for diesel fuel and liquefied gas for certain sectors of the economy or areas of use.
The purpose of the draft law – ensuring stability and predictability for investment activity during the period of economic recovery after the war and before Ukraine's accession to the EU in the part of the fuel excise tax system by gradually bringing the fuel tax level to the requirements of the European Energy Directive.
In addition, the document is aimed at preventing in the future chaotic changes in excise tax rates on fuel without economic justification, calculations of socio-economic consequences and contrary to the requirements of European and national legislation regarding the basis of the formation of excise policy on energy products.
The bill proposes:
- introduce a system of fuel excise tax rates based on Council Directive 2003/96/EC;
- for the period until the termination or abolition of martial law on the territory of Ukraine, to establish excise tax rates on fuel in the amount of 5% of the minimum rates according to the EU Directive, i.e. for motor gasoline in the amount of €17.95 per 1000 liters, for diesel fuel - €16.5 for 1000 liters, for liquefied gas – €3.4 per 1000 liters;
- introduce a gradual increase in excise tax rates on fuel in the period after the termination or abolition of martial law on the territory of Ukraine before Ukraine's accession to the EU, as well as during the first four years after:
- for diesel fuel, biodiesel, liquefied gas, butane and isobutane, intended for refueling special machines, mechanisms, machinery and equipment that perform work off public roads, railway locomotives, sea or river vessels, as well as for heating residential facilities and non-residential real estate, set a rate of €21 per 1,000 liters;
- for diesel fuel, biodiesel, liquefied gas, butane and isobutane used by the Armed Forces, the National Guard, the Ministry of Internal Affairs, the State Emergency Service, military units, budget institutions, health care institutions and local self-government bodies, set a rate of €21 per 1,000 liters;
- for liquefied gas, butane and isobutane intended for cooking or heating residential and non-residential real estate, set a rate of €0 per 1,000 liters;
- introduce a system of control over the targeted use of fuel, taxed at reduced rates, using tax bills (similar to the control of the entire supply chain and use of aviation fuel);
- instruct the CMU to submit proposals to the Verkhovna Rada of Ukraine for consideration during the state of martial law to direct to the reserve fund of the state budget revenues from excise tax on fuel produced in Ukraine and excise tax on fuel imported into the customs territory of Ukraine;
- entry into force of the law on November 1, 2022.
As EcoPolitic previously reported, there are several types of environmental taxes in Ukraine which enterprises must pay in a mandatory manner. Currently, the rate of eco-tax on CO2 emissions in Ukraine is one of the lowest in the world.
