Ukrainian farmers are concerned about the increased excise tax on fuel and its impact on the cost of agricultural production. The increase in taxation by 2028 will lead to additional costs for producers of more than UAH 13 billion annually, meaning that Ukrainian agribusiness will pay five times more than European companies.

In his speech on Ukrainian TV, Denys Marchuk, Deputy Chairman of the Ukrainian Agri Council (“UAC”), emphasized that an increase in fuel excise tax, like any other tax, always has a negative impact on production costs. This increase is related to the process of Ukraine's European integration, in which the country is obliged to adopt directives that bring it closer to European legislation. However, there are important nuances in the fuel excise tax.

“In the European Union, businesses that do not use public roads pay only 50% of the excise duty. Unfortunately, in Ukraine, agrarians already pay much more than their European counterparts,” said Denys Marchuk. According to him, in Eastern European countries, such as Lithuania, Latvia, and Romania, the excise tax is no more than EUR 60 per thousand liters, while in Ukraine, businesses have to pay EUR 139 per thousand liters. This makes Ukrainian farmers uncompetitive on the European market.

Denys Marchuk noted that if the excise tax is increased to 330 euros per thousand liters by 2028, Ukrainian businesses will pay five times more than European companies. The UAC has already taken the initiative to reduce the excise tax for those who do not use public roads. The relevant amendments to the draft law No. 11256-2, which passed the first reading, have already been registered.

“We understand that funds are needed for defense now, but we demand that the excise tax rate should not exceed 50% after the war is over. This will help businesses and agricultural producers to plan their activities better,” added the Deputy Head of the UAC.

According to his estimates, from 2024 to 2028, the excise tax increase will result in additional costs for producers of more than UAH 13 billion annually. Starting from 2025, this burden will amount to more than UAH 5.5 billion.

Denys Marchuk emphasized that farmers operating in the third year of the war and suffering significant losses, especially in the grain group, will not be able to withstand such an increase in costs. Therefore, it is important to adopt amendments to the draft law No. 11256-2, which will ensure a reduction in excise duty for agricultural businesses after the war ends.

“It is imperative to take into account that businesses that do not use national roads, mainly agricultural machinery, should not pay more than 50% of the excise tax on fuel,” the expert summarized.