Fuel Taxes and Excise Duties in Ukraine
Prime Minister Yulia Svyrydenko has informed the Verkhovna Rada that the Ukrainian Cabinet of Ministers will not reduce the Value-Added Tax (VAT) or excise duties on fuel. Instead, the government is launching a cashback program and will use the state-owned company 'Ukrnafta' to set a benchmark price for fuel. This decision comes amid a global fuel crisis triggered by the war in Iran, which has disrupted energy markets worldwide.
The state company 'Ukrnafta' will sell fuel with a minimal markup, and the compensation program at partner gas stations will run until May 1, 2026. The cashback rates will be:
- 15% on diesel
- 10% on gasoline
- 5% on autogas (LPG)
Currently, Ukraine imports over 85% of its fuel, with nearly 250,000 tons imported in March alone. The country's reserves now stand at approximately 100,000 tons for each type of fuel.
Fuel Supply and Pricing
Fuel supplies are sourced from over 10 countries, primarily Poland, Lithuania, Romania, and Greece. While oil prices reached $120 per barrel, they are currently holding at around $100. Recently, the price of diesel in Ukraine hit a high of 82 hryvnias per liter. As noted by Denys Shmyhal,
"The global fuel crisis is unfolding due to the war in Iran. This affects everyone: America, Europe, Asia. Ukraine imports over 85% of its fuel, so this crisis undoubtedly hits us as well."
The introduction of the cashback system and the use of 'Ukrnafta' as a price benchmark represent the government's attempt to alleviate the financial burden on consumers amidst high fuel prices. Given Ukraine's heavy reliance on imported fuel, these measures may help stabilize the domestic market, though they do not address the root causes of the global fuel crisis. These policies could also have broader social implications, as fuel costs directly impact prices for other goods and services across the country.