Marketplaces to pay VAT: Ministry of Finance explains changes under the new taxation model for international parcels

The Ministry of Finance explained what the new model of taxation for international parcels will change, and also debunked myths regarding the cancellation of tax benefits for parcels, UNN reports. 

The proposal to introduce a new model for taxing international mail shipments (draft laws 15112-d and 12360) has gained wide discussion among the public and business 

Myth #1: The new rules will delay parcel delivery and create queues

The Ministry of Finance stated that the procedure for receiving parcels for the end consumer will remain convenient and fast, as it is now. The new IOSS system will involve full digitalization and automatic data exchange between foreign marketplaces, postal operators, and customs authorities. All customs tools provided for by draft law No. 12360 are aimed at automating processes, which eliminates the need for personal contact between the buyer and customs or additional time costs at the border.

Myth #2: The new system will introduce new taxation on goods for defense needs

The ministry explained that draft law No. 15112-d provides for expanded opportunities to support the Defense Forces. 

Current legislation exempts only unarmed unmanned aerial vehicles from VAT. Draft law No. 15112-d expands this benefit—the words "unarmed" are excluded, meaning that armed UAVs and their parts are also exempt from VAT. This is a direct strengthening of tax support for the sector, not its weakening. Regarding components and equipment ordered by military personnel personally: the draft law introduces special taxation rules exclusively for goods purchased through marketplaces within distance selling. In this case, VAT will be included in the price of the goods at the stage of purchase by the platform operator—no additional delays at customs will arise for the recipient. The mechanism is specifically designed not to burden customs and not to slow down delivery 

It is emphasized that the draft law not only does not harm defense capability—it strengthens it by removing tax restrictions on armed drone systems, which were not present in current legislation.

Myth #3: Recipients will have to calculate taxes and fill out declarations on their own

The department noted that the obligation to calculate and pay VAT (20%) is placed on the marketplace (electronic interface). For the citizen, the process will be familiar: the tax will be automatically included in the price of the goods directly at the moment of purchase on the platform. This model complies with EU Council Directives and is already successfully functioning in European Union countries, where marketplaces act as responsible agents for settlements with the budget.

Myth #4. All shipments will be subject to taxation, including gifts from relatives from abroad

The reform clearly distinguishes between commercial operations and private non-commercial shipments. "Citizen-to-citizen" (C2C) category parcels worth up to 45 euros will not be subject to VAT if they are not intended for further resale. Limits also remain for goods in unaccompanied baggage (personal items or goods that a person sends across the customs border separately from themselves, i.e., without personal presence near the cargo)—up to 150 euros without paying taxes.

Myth #5. Changing taxation rules will negatively affect economic activity

Entrepreneurs have always paid 20% VAT. Foreign online sellers and importers have not. The abolition of the benefit removes discriminatory conditions for the national producer and, for the first time in years, creates conditions for fair competition. This means jobs, GDP growth, and higher revenues to the state budget to fund the army. White-market businesses have already publicly supported the reform.

According to expert estimates, the potential changes will provide revenues to the state budget of about 10 billion UAH annually. These funds are a critical resource for financing the security and defense sector under martial law.

Myth #6. Business will not have time to prepare

The legislation provides for a sufficient transitional period. The new rules will come into force no earlier than January 1, 2027. The decision to launch the system will be made by the Government only after confirming the full readiness of the IT component of the customs authorities and the corresponding software of the marketplaces. In addition, during the first year of the system's operation, administrative liability will not be applied for unintentional errors in VAT payment 

Myth #7. A blow to the wallet

This decision is a blow to the "shadow" economy and tax payment optimization. Today, out of 75 million parcels annually, less than 1% are actually taxed.

Myth #8. Foreign marketplaces will stop selling to Ukraine

The EU implemented a similar model back in 2021, and not a single large marketplace left the European market. Ukraine represents over 30 million customers. Dozens of other markets worldwide have already followed a similar path.

Myth #9. This will cause smuggling

This decision is a step toward solving the problem. Today, commercial batches are artificially split into small "personal" parcels under 150 euros to avoid taxes. This is the illegal scheme allowed by the current benefit. Under the new model, the scheme stops working.

Myth #10. Ukrainian stores will raise prices

Ukrainian producers and retail are already operating while paying all taxes, so the reform does not create a new burden for them. It only removes the tax advantage for some foreign marketplaces.

No manufacturer, retail chain, or business association has stated the need to raise prices due to the reform. The experience of the EU, which abolished a similar benefit in 2021, also did not show a mass increase in prices.

The introduction of a modern model for taxing electronic commerce is another step toward Ukraine's integration into the single European economic space and strengthening the state's financial stability, the department concluded.

As a reminder 

Ukraine must pass a law on the introduction of VAT on parcels from abroad to continue cooperation with the International Monetary Fund under the $8.1 billion financing program; otherwise, receiving funds from the European Commission will be in question. 

Deputies supported a draft law on data exchange between online services and the tax office. The new rules will not affect small sellers of goods up to 2000 euros per year.

Ukraine's First Deputy Prime Minister Yulia Svyrydenko left the United States inspired by what she called positive talks with senior US officials, including Treasury Secretary Scott Bessent, stating she believes he is supportive of Ukraine. 

The International Monetary Fund understands the sensitivity of the issue regarding the introduction of VAT taxation for individual entrepreneurs (FOPs) in Ukraine.