Preferential taxation of electric vehicles: will the price increase if benefits are canceled, and what will happen to the market?
Kyiv • UNN
The Verkhovna Rada adopted the draft budget for 2026 in the first reading, instructing the Cabinet of Ministers to consider extending tax benefits for electric cars. Experts predict a 40% increase in the price of electric vehicles and a 30% market decline if the benefits are canceled.
The Verkhovna Rada adopted the draft budget for 2026 in the first reading, which, in particular, instructed the Cabinet of Ministers to consider the possibility of extending tax benefits for importing electric cars until the end of 2026. People's deputies predict that the amendment will be rejected, and therefore the import of electric cars will be taxed under general conditions.
Stanislav Buchatsky, founder of the Car Market Research Institute, told UNN that if the benefits are canceled, the price of electric vehicles could jump by up to 40% and the market for such cars would fall by up to 30%.
Details
Back in 2017, the Verkhovna Rada adopted a law that exempted from value-added tax operations on the import into Ukraine of vehicles equipped exclusively with electric motors.
That is, electric vehicles were exempt from customs duties (10% of the car's value) and VAT (20%).
The only additional cost remains the excise tax, which is 1 euro per kilowatt-hour of battery capacity, which usually does not exceed 100 euros.
This norm was supposed to be in effect until the end of 2018, but the Rada has repeatedly extended this preferential period. In particular, in 2024, parliamentarians extended the tax benefit until January 1, 2026.
On October 22, the Verkhovna Rada adopted the draft State Budget for 2026 in the first reading. In particular, people's deputies supported amendment No. 1061, which proposes to extend the preferential taxation until January 1, 2027, although this amendment was rejected by the relevant committee.
However, it should be noted that this is not a final decision, but only proposals to the government regarding the formation of the budget for the next year. That is, the government will decide whether the specified amendment will be submitted for the second reading or not.
People's deputies predict that the amendment will be rejected by the Ministry of Finance.
"This is an instruction to the government. That is, it is not yet considered finally adopted, the government still has to submit the final text in November," said MP Yaroslav Zheleznyak.
As Stanislav Buchatsky told UNN, the number of electric vehicles currently imported, bought, resold, and the total number of electric vehicles in Ukraine is precisely due to the so-called "zero customs clearance," i.e., the absence of VAT, customs duties, and reduced excise tax, which led to such quantities, such volumes, and such a market size.
Therefore, it is difficult to say that the budget loses money on zero taxation. If we assume that 10,000 electric vehicles are imported per month, then if there were taxes, this number would probably be much smaller. Probably, not so many cars would be imported
He stated that he was not ready to say how much the budget loses on preferential customs clearance, because no one had conducted normal economic calculations.
According to him, the question of how much the budget can receive after the abolition of benefits should be linked to whether this will lead to a market decline.
Indeed, the budget will only be able to receive if these electric vehicles continue to be imported in some volumes. It is obvious that such a number (of electric vehicles in Ukraine - ed.) as of now is precisely due to this zero customs clearance. When it is canceled, or rather, when VAT simply starts to be charged automatically, cars will become more expensive. At least 20% VAT will be charged, plus related costs. In my opinion, the price of electric vehicles will increase by at least 30%, or even 40% from the new year. Accordingly, a higher price means less interest, and, accordingly, a market decline of about 30-40%. 20% is probably the minimum, but objectively about 30-40%. The question is also what cars will be imported, because it may be that people, having money in hand, taking into account this additional VAT, will simply buy cheaper electric vehicles, not newer ones, and therefore we will also lose on the quality of these cars
The expert adds that it is difficult to say how much the budget will receive if the amendment is rejected.
We will see this in practice from the new year, if VAT is returned, we will understand. Probably, some amount will be received, but here again the question is whether people, if they understand that they wanted to buy an electric car to save money, because, first of all, electric cars are bought to save money, will they not choose, for example, a car with an internal combustion engine instead, and will not buy electric cars. Accordingly, this part may simply abandon the idea of buying an "electric car"
He emphasizes that, in his opinion, it is not necessary for customs clearance for electric vehicles to be absolutely zero, but there should be some rational formula.
"Not just thoughtlessly return the VAT calculation. This is not just a matter of electric vehicles, all this needs to be looked at more broadly, because cars, in principle, in our opinion, are taxed quite illogically, and this issue should have been comprehensively worked out and adequate conditions introduced, probably, for all cars, regardless of whether it is an "electric car" or an internal combustion engine. If nothing is done, then from the new year VAT will simply start to be charged and, probably, this will affect the market, probably there will be a market decline, probably there will be less import of electric vehicles, probably people will switch to internal combustion engines. And it is not a fact that this will actually be beneficial for the budget, for the country after a certain period," Buchatsky summarized.