What conditions has the EU set for Ukraine to receive €8.35 billion: taxes, changes for individual entrepreneurs, and customs reform
As reported by the Judicial and Legal Newspaper, a draft law on ratification of the memorandum with the European Union on providing financial assistance to Ukraine, submitted by President Volodymyr Zelenskyy, has appeared on the Verkhovna Rada website.
The draft law No. 0376 is scheduled for consideration by the Verkhovna Rada Committee on European Integration on May 28. After that, the document is planned to be put to a vote in the parliamentary session hall.
The memorandum with the EU provides for new taxes, changes for individual entrepreneurs, and customs reform.
The memorandum published on the Verkhovna Rada website between Ukraine and the EU on financial assistance contains a list of conditions, the fulfillment of which will determine the receipt of three tranches totaling up to €8.35 billion (approximately €3.2 billion for the first tranche, €3.7 billion for the second tranche, and €1.45 billion for the third tranche).
Each tranche may be paid in one or several parts. The Commission will decide on the amount and timing of each tranche and its parts.
The disbursement of tranches will depend, among other things, on the implementation of macroeconomic and structural corrective measures.
Conditions for receiving the tranche
POLICY CONDITIONS FOR THE FIRST TRANCHE
Component 1: Mobilization of domestic revenues
Condition 1.1 Submit to the Rada a draft law to cancel the exemption from taxation of international parcels, except for goods intended for security and defense purposes.
Condition 1.2 Submit to the Rada a draft law introducing taxation of income received through digital platforms.
Condition 1.3 Adoption by the Rada of a law extending the military levy (military tax) at 5 percent for 3 years, which will provide at least UAH 140 billion in additional revenues per year.
Component 2: Sustainability and efficiency of public expenditures
Condition 1.4 Adoption by the Cabinet of Ministers of the Government Resolution "On approval of the Procedure for developing, monitoring, and evaluating the results of the implementation of strategies that form the basis for proposals on public investments" together with the corresponding action plan, establishing the political basis for developing sectoral strategies for public investments to consider the PIM cycle for 2027-2028.
Component 3: Public financial management systems
Condition 1.5 Adopt and publish an updated Public Financial Management (PFM) Strategy that defines medium-term reform priorities and an Action Plan for its implementation across all main PFM areas.
Condition 1.6 Submit to the Cabinet of Ministers a new Customs Code of Ukraine that will align customs legislation with the EU Customs Code (Regulation (EU) No 952/2013).
Condition 1.7 Appoint a new permanent head of the State Customs Service.
POLICY CONDITIONS FOR THE SECOND TRANCHE
Component 1: Mobilization of domestic revenues
Condition 2.1 Submit to the Rada proposals for amendments to legislation aimed at aligning Ukraine's corporate taxation system with Article 4 of the EU Anti-Tax Avoidance Directive (Council Directive (EU) 2016/1164).
Condition 2.2 Adoption by the Rada of legislative changes introducing taxation of income received through digital platforms.
Condition 2.3 Adoption by the Rada of a law canceling the exemption from taxation of international parcels, except for goods intended for security and defense purposes.
Condition 2.4 Adoption by the Rada of legislation establishing a property valuation system that defines institutional roles and responsibilities for property valuation, strengthens certification and professional accountability mechanisms for appraisers, establishes harmonized rules and procedures for using valuations in public functions, provides for the creation and operation of state registers related to valuation, and sets transitional provisions for implementation.
Condition 2.5 Adoption by the State Tax Service of a roadmap to improve VAT compliance management, identifying compliance risks, reform priorities, and implementation timelines.
Condition 2.6 Adoption by the State Tax Service of a tax compliance improvement plan identifying key gaps and measures to address them within the next year.
Component 2: Sustainability and efficiency of public expenditures
Condition 2.7 Adoption of secondary legislation or methodological guidelines clarifying the definition of investments subject to the public investment management system (PIM) and distinguishing them from other capital expenditures, to be applied, among other things, during the preparation of the Unified Project Portfolio for 2027.
Condition 2.8 Adoption by the Cabinet of Ministers of the Convention on a unified information ecosystem for public investment management to ensure integration of systems and data related to PIM with IT systems of the Ministry of Finance, Ministry of Economy, Environment and Agriculture of Ukraine, Ministry of Development and relevant sectoral ministries, including DREAM, State Budget, LOGICA, Prozorro, and Treasury system, among others. The concept must include an action plan defining implementation stages and timelines.
Condition 2.9 Adoption of the Budget Declaration for 2027-2029, which should include:
(i) a baseline policy scenario for 2027-2029 reflecting the trajectory of main revenue and expenditure indicators under unchanged policy as provided by current legislation. This scenario will also quantify the gap—or fiscal space—between the deficit under current policy and the deficit according to government fiscal targets agreed with IMF staff;
(ii) an active policy scenario for 2027-2029 including the impact of all planned expenditure and revenue measures, as well as measures to achieve government fiscal targets on deficit and general government debt;
(iii) a section explaining changes in macroeconomic assumptions compared to the previous Budget Declaration and deviations between previous forecasts and latest execution data;
(iv) a special annex containing a brief summary of public investment projects reflected in medium-term fiscal forecasts according to the PIM cycle.
Condition 2.10 Adoption and publication of a Cabinet of Ministers decision defining the areas, objectives, and timelines for conducting public expenditure reviews in 2026, covering areas related to overcoming the consequences of hostilities and ensuring post-war recovery, such as housing, regional, and veterans' policy. The decision will also specify requirements for expenditure review reports, including at least two options for achieving the review objective; proposals for optimizing public expenditures; and a proposal for the optimal option based on comparison of options included in the report.
Component 3: Public financial management systems
Condition 2.11 Adoption by the Ministry of Finance of an updated Digital Development Plan for the State Customs Service of Ukraine until 2030.
Condition 2.12 Approval by the Rada of the appointment of three missing experts to the selection commission for members of the Accounting Chamber of Ukraine's board.
POLICY CONDITIONS FOR THE THIRD TRANCHE
Component 1: Mobilization of domestic revenues
Condition 3.1 Submit to the Rada a proposal for a law introducing measures to reform the preferential tax regime, ensuring additional revenues of at least UAH 70 billion per year, including:
(i) measures to counter tax evasion to prevent artificial fragmentation of businesses to meet criteria for preferential tax regimes;
(ii) restrictions on repeated transition of business entities to the simplified taxation system after moving to the general taxation system;
(iii) introduction of differentiated tax rates for third group taxpayers depending on the type of economic activity; and
(iv) steps to align with Council Directive 2006/112/EC.
Condition 3.2 Adoption by the Rada of a law simplifying VAT administration for individual entrepreneurs (quarterly reporting instead of monthly; monthly tax invoices instead of daily; formation of preliminary tax declarations for individual entrepreneurs; simplification of unblocking tax invoices).
Condition 3.3 Adoption by the Rada of amendments aimed at aligning Ukraine's corporate taxation system with Article 4 of the EU Anti-Tax Avoidance Directive (Council Directive (EU) 2016/1164).
Condition 3.4 Submit to the Rada proposals for amendments aimed at aligning Ukraine's corporate taxation system with the EU Anti-Tax Avoidance Directive (Council Directive (EU) 2016/1164), including Articles 5 (capital gains tax on asset transfers), 6 (general anti-abuse rule), 7 and 8 (rules on controlled foreign companies), and Articles 9, 9a, and 9b (hybrid mismatches).
Component 2: Sustainability and efficiency of public expenditures
Condition 3.5 In cooperation with the World Bank, IMF, and Commission services, provide a report with long-term pension expenditure forecasts based on the current system and parameters of the planned pension reform.
Condition 3.6 Submit to the Rada the draft State Budget of Ukraine for 2027, which should include explanations of how the results of the expenditure review were taken into account in the budget and reflected in expenditure allocations.
Condition 3.7 Develop and present to the Commission a new Public Procurement Strategy (2027-2030).
Condition 3.8 Prepare a concept note on the defense procurement law to be developed in 2027 aimed at aligning Ukraine's legislative framework with the EU acquis.
Component 3: Public financial management systems
Condition 3.9 Preparation by the State Audit Service of proposals for clear organizational and managerial separation between inspection and audit functions within the State Audit Service structure.
Condition 3.10 Establish 10 full audit committees according to legal requirements in key budget holders: Ministry of Internal Affairs, Ministry of Energy, Ministry of Digital Transformation, Kyiv, Lviv, and Chernivtsi Regional State Administrations; State Agency for Restoration and Infrastructure Development of Ukraine; State Property Fund of Ukraine; National Securities and Stock Market Commission; and National Commission for State Regulation in Energy and Utilities.
Condition 3.11 Adoption by the Ministry of Finance of a revised national internal audit standard aligned with global internal audit standards.
Condition 3.12 Adoption by the Rada of a new Customs Code of Ukraine in accordance with the EU Customs Code (Regulation (EU) No 952/2013).
Condition 3.13 Approval of technical requirements for national customs IT systems processing customs declarations (AES, CCI/NIS), as well as a risk management system compatible with ICS2 for integration with EU IT systems. Establishment of necessary project management structures.
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