On June 18, 2024, the Verkhovna Rada of Ukraine adopted in the second reading the Draft Law No. 10346 "On State Regulation of Production and Turnover of Ethyl Alcohol, Alcohol Distillates, Bioethanol, Alcoholic Beverages, Tobacco Products, Tobacco Raw Materials, Liquids Used in Electronic Cigarettes and Fuel".

The relevant draft law, in terms of regulating the storage of fuel, was developed with the active participation of the UAC experts. The conditions have been significantly simplified and significantly changed technical gaps in the current system of licensing the storage of fuel for own consumption, which is mandatory for farmers.

As a reminder, the current system for regulating fuel circulation contains a number of requirements that are impossible to fulfill in practice. This leads to significant problems for companies and unjustified penalties. In particular:

• The license must indicate the volume and location of all non-stationary containers with a capacity of more than 5 liters (small canisters, barrels, etc.). The license will be revoked and a fine of UAH 500,000 will be imposed for the incorrect location of at least one container with a capacity of more than 5 liters or for the presence of an unspecified container;
• The license must specify the address of fuel storage, which is not always possible, since the fields where farmers store fuel do not have an address. An incorrect address leads to the license revocation and a fine of UAH 500,000;
• In the off-season, farmers mix both winter and summer diesel fuel, which, according to the current legislation, is the production of fuel without a license - a fine of more than UAH 1 million;
• Refueling equipment under contractor agreements falls under the definition of fuel sales and results in a fine of UAH 500,000;
• The excessive level of penalties for storing fuel for own needs without a license (UAH 500,000 for the first violation) is not commensurate with the risk posed by such storage.

The changes contained in Draft Law No. 10346 provide for:

1. For the vast majority of agricultural enterprises, licenses for the right to store fuel for their own needs will be issued automatically on an application basis;
2. Differentiation of requirements for specifying in the license application the capacity of fuel storage tanks and their location, depending on their type: for stationary ones - the capacity and location of each one; for non-stationary tanks with a capacity of more than 250 liters each - their total capacity; for other non-stationary tanks - only an indication of their presence or absence;
3. It is now possible to indicate the cadastral number of the land plot instead of the address of the location of the tanks used for fuel storage;
4. Refueling under contractor agreements that relates to own consumption in accordance with subparagraph 14.1.212 of the Tax Code of Ukraine will not be considered wholesale fuel trade;
5. The law stipulates that mixing of winter and summer diesel fuel will not be considered fuel production;
6. Last but not least, the draft law significantly reduces the level of fines imposed for storing fuel for personal use without a license. Instead of the current UAH 500,000, a differentiated amount is established: for the first violation - 4 minimum wages (UAH 32,000 in 2024); for the second - 8 (UAH 64,000); for the third and more - 85 (UAH 680,).

The UAC welcomes the adoption of the Draft Law No. 10346 by the Parliament, which significantly simplifies the conditions for licensing fuel storage for farmers. We would like to express our special gratitude to Danylo Hetmantsev, Chairman of the Verkhovna Rada Tax Committee, Oleksandr Kovalchuk, MP, the Ministry of Agrarian Policy and the State Tax Service of Ukraine for their constructive work and willingness to hear and solve the problems of agrarian business.