90 billion secured by reparations and a tax ultimatum: the conditions Ukraine has already fulfilled for the IMF and EU

Today, Ukraine's financial stability relies on the support of international partners. The main instrument is EU Regulation 2026/467 (UASL), which establishes enhanced cooperation to provide Ukraine with a loan to be repaid from future Russian reparations.

As reported by the “Judicial and Legal Newspaper”, Ukraine and the European Union have concluded a historic Loan Agreement for up to 90 billion euros, which is intended to be the financial foundation for reconstruction and defense. However, receiving the funds is not unconditional. The disbursement of each tranche depends on meeting a number of political and economic conditions.

The International Monetary Fund (IMF) mission led by Gavin Gray has already completed its direct visit to Kyiv without the traditional statement about reaching a Staff Level Agreement. Despite optimistic statements about the proximity of the next tranche, behind the scenes there was a difficult discussion regarding fiscal policy.

The loan agreement supporting Ukraine is a unique financial instrument.

The maximum amount of available financing under this instrument is up to 90,000,000,000 euros. The availability period for these funds is strictly limited until December 31, 2027, coinciding with the current multiannual financial framework of the European Union.

Article 3 of the Agreement explicitly states: Ukraine's obligations to repay the principal amount are to be fulfilled exclusively from war reparations, compensation, or financial settlement from Russia. As collateral, Ukraine grants the EU a security interest regarding its claim against the Russian Federation for reparations. That is, if Russia does not pay voluntarily, the EU has the right to use frozen Russian assets on its territory to cover Ukraine's debt.

Tax ultimatum: conditions for the first and second tranches

According to the Memorandum of Understanding, Ukraine committed to mobilizing domestic revenues.

For the first tranche (€3.2 billion):

• Abolition of the exemption from taxation of international parcels (except for defense goods). This means the introduction of VAT and customs duties on goods previously imported directly by citizens without additional costs.

On May 26, 2026, the Verkhovna Rada failed to pass this bill in general and could not even send it for a repeated second reading.

• Introduction of a tax on income received through digital platforms (OLX, Uber, Airbnb, etc.).

The Verkhovna Rada adopted in the first reading bill No. 15111-d.

• Extension of the military tax at 5% for another 3 years, which should provide the budget with 140 billion UAH per year.

This provision is already in effect, fixing the military tax rate at 5%.

For the second tranche (€3.7 billion):

• Alignment of Ukraine's system with EU Directive 2016/1164 on combating tax avoidance.

The Ministry of Finance of Ukraine has officially developed and submitted for public discussion a large-scale bill amending the Tax Code regarding the implementation of ATAD rules.

• Creation of a new property valuation system and state registers for transparent real estate taxation.

There is no law on changing rates yet, but the Ministry of Regional Development and the State Property Fund together with the Ministry of Digital Transformation are conducting a reform of state registers (in accordance with the Ukraine Plan). A technical merger of the Register of Property Rights and the Valuation Base is underway. The Ministry of Finance is expected to present a full roadmap by the end of the year to transition from taxation of real estate by square meters to taxation by market value.

• Adoption of a roadmap to strengthen VAT control and combat VAT fraud schemes.

The roadmap and new analytical modules for the State Tax Service were approved by the Cabinet of Ministers and agreed with IMF experts before the May mission began. Strengthening VAT control continues through changes in risk criteria in Resolution No. 1165.

Customs Reform: challenges of the third tranche

The most resonant changes are planned within the conditions for the third tranche (€1.45 billion):

• Reforming the preferential regime to prevent artificial division of large businesses into dozens of individual entrepreneurs (FOPs).

Although the IMF estimates fiscal losses from this scheme at a record 70 billion UAH per year, no large-scale legislative reform prohibiting legal entities from working with FOPs or forcibly liquidating such a model has been adopted.

• Introduction of different tax rates for the 3rd group of FOPs depending on the type of activity.

The idea to split the 3rd group of FOPs by types of activity and set different single tax rates caused public resistance. The 2026 budget legislation retained the basic fixed rates.

• Ukraine must submit and adopt a code fully compliant with EU regulations and appoint a permanent head of the Customs Service.

Orest Mandziy was officially appointed as the head of the State Customs Service. The appointment was made following an open transparent competition involving international experts.

On June 3, 2026, the Cabinet of Ministers officially registered in the Verkhovna Rada the draft New Customs Code of Ukraine under No. 15295.

Human Rights and the Rule of Law

An important aspect is Article 5 of the Memorandum and paragraph 27 of the Preamble of the Agreement. They establish that the disbursement of funds is possible only if Ukraine complies with:

• Effective democratic mechanisms.
• The rule of law and anti-corruption efforts.
• Guarantees of human rights, including minority rights.

The government primarily focuses on meeting fiscal indicators stipulated by agreements with international financial institutions and the European Union. At the same time, progress in judicial reform, anti-corruption efforts, and strengthening guarantees of the rule of law is assessed as insufficient.

While fiscal pressure is implemented at an emergency pace, progress in the real protection of human rights, reform of the law enforcement system, and overcoming systemic corruption remains declarative — only on paper or in the form of reports on the creation of working groups.

International donors viewed reforms as a symmetrical process: businesses and citizens pay more taxes but in return receive a transparent judicial system, protection from corrupt extortion, and guarantees of their rights. The imbalance of this system toward exclusively fiscal coercion not only creates internal social tension but also directly violates the provisions of Article 5 of the Memorandum.

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