The European Commission has warned Ukraine that legislation stalled in its parliament is essential to unlock a planned 3.7 billion euro financial aid tranche.
Balazs Ujvari, European Commission spokesperson for economy and budget, delivered the warning in Brussels on Wednesday following parliamentary votes in Kyiv. He stated that passing a bill to remove tax exemptions on overseas parcels is a mandatory requirement for continued European Union support.
Ujvari explained that the legislation forms a critical component of the overall 8.35 billion euro macro financial assistance program deployed for Ukraine this year. The European Union has already disbursed 3.2 billion euros under the program and is evaluating a second tranche of approximately 3.7 billion euros scheduled for early autumn.
According to Ujvari, the upcoming autumn payout is linked to 12 specific benchmarks, with the package tax law standing as one of the key conditions. He emphasized that the law plays a vital role in mobilizing domestic budget revenues, making its enactment necessary for disbursements to proceed as planned.
Aid Conditions and Parliamentary Deadlock
Macro financial assistance is an emergency funding framework used by the European Union to support partner countries during economic strain. Disbursements under the mechanism are released in installments and remain strictly conditional on agreed structural economic reforms and revenue measures.
The warning from Brussels follows votes in the Verkhovna Rada on September 1. Ukrainian lawmakers failed for the second time to pass two draft bills that would abolish the value added tax exemption for international post packages valued under 150 euros.
During the same September 1 sitting, parliamentarians also refused to approve a resolution appointing an advisory group of experts to the Accounting Chamber. The failure to pass these measures continues a pattern seen earlier in the year, when parliament experienced similar voting difficulties during the spring.
Under current Ukrainian tax regulations, cross border parcels below the 150 euro threshold enter the country exempt from value added tax. Repealing the tax relief is intended to boost domestic customs revenue and align national fiscal policy with European standards.
Deficit Warnings and Upcoming High Level Talks
Addressing parliament before the September 1 vote, Ukrainian Prime Minister Serhiy Koretskyi urged lawmakers to act, warning that a multi billion deficit has opened in the nation defense budget. President Volodymyr Zelenskyy also commented on the outcome of the parliamentary sitting on Tuesday evening.
The Accounting Chamber functions as the supreme financial audit institution of Ukraine, charged with monitoring state spending and government account balance. International partners have emphasized strengthening independent oversight mechanisms alongside tax reform efforts.
Discussions between Brussels and Kyiv will escalate next week during a scheduled video conference between European Commissioner Valdis Dombrovskis and Prime Minister Koretskyi. The stalled tax legislation and financial assistance benchmarks will be central to the talks.
The European Commission serves as the executive branch of the European Union, overseeing financial aid distribution and managing compliance with international reform agreements. The Verkhovna Rada, Ukraine single chamber parliament, holds exclusive authority over national tax laws and statutory appointments.
