8 February the Cabinet of Ministers approved a resolution regarding the Procedure for Paying Fuel Excise Tax to Local Budgets, which procedure was developed by the Ministry of Finance of Ukraine.

What is the problem?

In 2016, the fuel retail sale tax in the amount of 5% was cancelled, which tax was paid to local budgets. The reason behind was the illegal retail sale of fuel by separate payers of that tax, which fact resulted in shortfalls to local budgets of the excise tax on retail sale. The Ministry of Finance of Ukraine developed an efficient model in accordance with which 13.44 % of the excise tax imposed on the produced and imported fuel will be paid to local budgets. For instance, currently, the rate of the gasoline excise tax is EUR 213.5 per 1,000 litres, and EUR 28.7 of the tax amount (13.44 %) will be channelled to local budgets.

How does it help?

Firstly, that model will encourage reporting real salaries and improve the efficiency of paying excise tax. Secondly, it will ensure steady revenues to local budgets. In its turn, that will have a positive impact on the social and economic development of regions in 2017.

Additional information:

The Procedure provides for:

• the payment of a part (13.44 %) of the excise tax imposed on the produced and imported fuel to local budgets;
• the daily allocation of a part of the fuel excise tax among local budgets in accordance with the percentages intended to be paid to local budgets.

The percentages intended to be paid to local budgets are determined on the basis actual charges on the fuel retail sale for 2016 in the relevant territory.