Parcels up to €150 – including VAT and duties: what is being proposed in the Rada and what taxes will need to be paid.

In the Verkhovna Rada, they are proposing bill No. 12429, which aims to eliminate the duty-free threshold for packages coming from abroad. Will packages from relatives, as well as small shipments containing perfumes, tea, and coffee, really be subject to tax?

Total Taxation: The Current Duty-Free Threshold is Set to be Abolished

According to the law, Ukraine has a duty-free threshold of 150 euros, meaning that packages and goods sent from abroad with a customs value not exceeding this amount are exempt from taxation.

This means that if the value of goods (in a single package) ordered from an overseas online store is less than 150 euros, that shipment will not be taxed. A similar approach is applied to packages sent from one individual to another, for instance, from a relative. However, the bill proposed in the Verkhovna Rada abolishes the duty-free threshold. As a result, all goods exceeding 150 euros, which were previously subject to a 20% VAT + 10% import duty, will now be taxed upon the law's enactment.

According to the law, Ukraine has a duty-free threshold of 150 euros, meaning that packages and goods sent from abroad with a customs value not exceeding this amount are exempt from taxation.

"The idea is not only that the state wants to impose more taxes on such imported goods, but also that it needs to curb the outflow of currency abroad," noted an expert.

No Taxes up to 45 Euros: What Exceptions are Proposed

There is only one exception in the proposed bill — goods valued at up to 45 euros that an individual sends from abroad to another individual in Ukraine. This pertains to operations that are not subject to taxation, provided that the goods are sent without any payment, intended for personal/family use, and their characteristics and quantity do not indicate a commercial purpose.

Additionally, the provision regarding tax-free operations does not apply if the package contains excise goods (alcohol, tobacco products), perfumes over 50 g, or toilet water exceeding 0.25 L, coffee (over 500 g), or tea (over 100 g).

If the volume of these goods exceeds the limit, even for a private package valued at up to 45 euros, a 20% VAT will have to be paid.

What is the Purpose of Introducing VAT on Packages

Experts indicate that this bill is primarily aimed at combating shadow business practices. This includes companies that split orders on foreign marketplaces in such a way that the goods arrive in separate packages valued under 150 euros. In fact, lawmakers believe that small businesses have become too active in the country, looking to profit from duty-free packages from abroad.

The bill on taxing packages introduces a new operation — distance selling of goods.

It is important to note that the bill on taxing packages introduces a new operation — distance selling of goods. The VAT on distance sales will be paid by the non-resident entity conducting such sales.

For example, online stores, marketplaces, and platforms for selling goods such as eBay, OLX, and AliExpress fall into this category. These platforms will be required to register as VAT payers, collect tax from buyers, and remit it to the state budget, as well as retain information about packages and their recipients for 10 years.

Considering that the VAT is included in the price tag, the enactment of this law is likely to lead to an increase in prices for budget category goods on foreign marketplaces for Ukrainians.

How Will the Introduction of the Tax Affect Inflation in Ukraine

Experts suggest that by imposing taxes on such packages, the government aims to regulate "grey" imports and improve the situation with the balance of payments, as some goods will enter Ukraine officially, with VAT applied.

"This will impact inflation, specifically. According to my calculations, if we consider that the influence of 'grey' imports through this system accounts for approximately 25%, the impact on inflation will be quite limited — up to 0.25%," noted Shevchishin.

As a reminder, the authors of the bill on taxing all packages from abroad include several members of parliament, notably the head of the Verkhovna Rada Committee on Finance, Taxation, and Customs Policy, Daniil Getmantsev, along with several deputies, including independent member Marianna Bezuhla.