The EU may tighten the conditions for granting Ukraine a €90 billion loan
The European Union is considering imposing stricter conditions for granting Ukraine a €90 billion loan. Part of the disbursements may be contingent on the implementation of unpopular changes to the tax system.
This is reported by Bloomberg.
According to the agency, the focus of the discussion is a review of the preferential tax regime currently in place for certain Ukrainian companies. Originally, this system was created for sole proprietors and small businesses and allows them to pay 5% of their revenue.
The Ministry of Finance and international donors believe that this model places a burden on the military budget, distorts competition, and contributes to the shadow economy.
One option under discussion is to transition companies with annual revenue exceeding 4 million hryvnias to the general taxation system with a 20% VAT rate.
EU aid, which may be tied to new requirements, is part of a broader support package for Ukraine worth approximately 60 billion euros, which also includes defense funding and the Ukraine Facility program to cover budget expenditures.
The European Commission stated that it is working to finalize a memorandum of understanding on financing for Ukraine and is coordinating the reform program with the IMF.
“The goal is to conclude negotiations as quickly as possible and develop an ambitious reform program to strengthen Ukraine’s economy and accelerate its integration into the EU,” the European Commission noted.
At the same time, as Bloomberg notes, the proposed changes could cause internal political tension in Ukraine due to their unpopularity. The process could also be complicated by tensions between government institutions.
Despite this, even if decisions are postponed, Ukraine will have to gradually reform its tax system in accordance with EU requirements as part of its future accession, including reviewing existing tax breaks.
Earlier, the Ministry of Finance published a schedule for the disbursement of financial assistance from the European Union to Ukraine as part of a €90 billion package for 2026–2027. The first funds are expected as early as May–June of this year.
The Ukrainian government has submitted to the European Commission a package of documents required to receive €2.7 billion under the Ukraine Facility mechanism. This funding is available to Ukraine upon the implementation and completion of a series of reforms stipulated in agreements with the EU.
Ukrainian President Volodymyr Zelenskyy stated that Ukraine plans to use the €90 billion loan from the European Union for the needs of the military, specifically for the development of domestic defense production, as well as for preparations for the winter season.
