EU to provide Ukraine with part of 90 billion only on condition of introducing a tax on parcels - Bloomberg
Kyiv • UNN
The European Union has linked the disbursement of aid to Ukraine with the introduction of a 20% VAT on foreign parcels. This requirement is necessary to receive funds from the EU and the IMF.
The European Union will link certain payments from the 90 billion euro aid package for Ukraine to an unpopular tax change already demanded by the International Monetary Fund. This was reported by Bloomberg, citing unnamed sources familiar with the matter, according to UNN.
Details
It is noted that the tax requirement will apply to the so-called macro-financial portion of the loan worth 8.4 billion euros. EU member states agreed on the terms of the macro-financial assistance program on Monday, according to Economy Commissioner Valdis Dombrovskis.
To receive these funds, Kyiv will have to pass legislation expanding the share of foreign parcels subject to a 20% value-added tax. ... Ukraine is expected to receive the first payment in June, the second in September, and the third by the end of the year following the completion of reforms
It is indicated that this requirement reflects a condition set by the IMF for the disbursement of the next $700 million tranche of its aid program. The European Commission, the EU's executive body, is aligning some of its financial aid conditions for Ukraine with those of the Washington-based lender.
"The tax amendment has proven to be very unpopular among Ukrainians, raising significant doubts about whether parliament will approve it. ... Ukrainians strongly oppose measures that would increase their tax burden, even if additional revenues are necessary to fund the military. They are also among the requirements on the path to EU accession, one of the key strategic goals for the former Soviet republic," the article states.
Context
An IMF mission will visit Ukraine in the coming weeks to assess economic reforms and the tax base. The focus is, in particular, on increasing its tax base, including the measure involving the introduction of value-added tax on low-value parcels from abroad.
According to Reuters, the introduction of VAT on parcels is a condition for $8.1 billion in IMF funding. The absence of the law would also block funds from the European Commission.
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