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Ukraine To Exempt Imported Natural Gas From VAT

by Tatiana Smolenska, Tax-News.com, Moscow

14 January 2014


Ukraine is preparing draft amendments to introduce a value-added tax exemption for imported natural gas.

In a statement on January 8, 2014, Ukrainian Prime Minister Mykola Azarov confirmed that he had ordered the preparation of draft legislation to amend the country's tax code to lower the cost of natural gas for consumers.

Ukraine's Cabinet has tasked the State Service of Ukraine on Regulatory Policy and Entrepreneurial Development to work with the relevant executive bodies to prepare the necessary legislation to introduce the exemption. Mykhailo Brodsky, the department's chairman, highlighted the incentive would also provide support for businesses by reducing their overheads.

The tax break's announcement comes after Ukraine suspended talks with the European Union towards an association agreement, reportedly fearing political repercussions from Russia. This month Russia committed financing worth USD6bn to support the development of nuclear energy in Ukraine.

The tax break will predominantly favor gas exporters in Russia as well as in Turkmenistan as Ukraine's largest suppliers. According to the Center for Eastern Studies, natural gas is Ukraine's most significant import, and the principal cause of the country's structural trade deficit.

TAGS: Russia | Turkmenistan | VAT rates | tax | business | value added tax (VAT) | VAT legislation | VAT cross-border transactions | oil and gas | legislation | trade | Ukraine | VAT refunds

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