World
Ukraine links a 2027 VAT increase to a war-risk insurance fund for businesses
Prime Minister Serhii Koretskyi said a planned one-point VAT increase is intended to help finance a program covering businesses hit by Russian attacks. He said Ukraine would need an initial contribution of about $1 billion.
Ukraine’s government has included a 1 percentage point increase in value-added tax in its 2027 draft budget to launch an insurance program for businesses against war-related risks, Prime Minister Serhii Koretskyi said in an interview reported by Ukrainska Pravda.
Koretskyi said daily Russian attacks are destroying Ukrainian companies and directly hurting the economy, the state budget and the country’s overall resilience. For that reason, the Cabinet has proposed creating a special fund to quickly compensate businesses for damage caused by Russian missiles and drones.
According to the prime minister, the mechanism requires an initial Ukrainian contribution of about $1 billion. Since there are no other sources to cover that cost, he said, the government placed the VAT increase in the 2027 budget bill.
As reported by Ukrainska Pravda, Koretskyi argued that the move is also meant to show allies that Ukraine is ready to invest its own resources in protecting its economy. He added that the government expects international partners to raise that contribution fourfold afterward.
The prime minister said a total $5 billion fund would allow insurance companies to offer affordable policies to Ukrainian businesses without the need for reinsurance abroad. He also said conventional war-risk insurance is currently ineffective because of its high cost and the long wait for payouts, whereas the new system would let businesses receive money as soon as emergency responders verify the destruction.
In that context, Ukrainska Pravda also recalled that Koretskyi had previously criticized the import of cheap parcels from abroad without VAT, saying it harmed Ukrainian business and that 80% of those shipments were used by dishonest traders to split goods into small batches.
Sources
About this piece. Written by El Notero with AI assistance, from reporting published by the outlet cited above. El Notero did no original reporting on this story.
