In early June of this year, the Verkhovna Rada of Ukraine adopted in the first reading the Draft Law No. 11256-2 "On Amendments to the Tax Code of Ukraine on the Implementation of the Provisions of the European Union's Law on Excise Tax".

The draft law provides for the harmonization of Ukrainian legislation with EU legislation and the implementation of Directive 2003/96/EC in terms of bringing domestic excise tax rates closer to the minimum level established in the EU.

The Draft Law provides for, among other things, a more than twofold increase in the excise tax rate on diesel fuel - from the current 139.5 to 330 EUR per 1,000 liters. The new rate will be applied starting from 2028, with a gradual annual increase before that: 2024 - EUR 177.6 per 1,000 liters; 2025 - EUR 215.7; 2026 - EUR 253.8; 2027 - EUR 291.9.

At the same time, Directive 2003/96/EC and the current practice of EU members provide for a minimum 50% reduction in the excise tax rate on diesel fuel used in vehicles that are not road users and do not use public roads, primarily agricultural machinery involved in field cultivation. Unfortunately, the relevant provisions of the EU Directive are not included in the Draft Law No. 11252-2.

That is why, in order to comply with the requirements of the EU Directive, the Ukrainian Agri Council, together with the Deputy of the relevant committee of the Verkhovna Rada, MP Oleksandr Kovalchuk, developed and registered the relevant amendments to the draft law. The amendments provide for the application of a reduced excise tax rate on diesel fuel intended for use by

• agricultural producers for the production of agricultural products;
• vehicles intended for use outside public roads, except for private vehicles used for personal needs;
• vehicles used for navigation on inland waterways (including fishing), except for private pleasure craft and used for personal needs.

For such fuel, the excise tax rate will be reduced by 50% of the rate envisaged by the draft law for 2028 (EUR 330 - the minimum rate for EU members) and will amount to 165 EUR per 1,000 liters.

The UAC once again expresses its gratitude to Oleksandr Kovalchuk for his constructive position and support of Ukrainian farmers. Together, we call on all MPs to support and fully implement the provisions of Directive 2003/96/EC, and not just the individual parts on increasing tax rates.