EV benefits vs defense revenues: what will the extension of tax incentives for EVs mean for Ukraine?
24 October 21:26
Tax incentives for electric cars: what has already been decided, how much it costs the budget and how it changes the market
on October 22, the Verkhovna Rada in the first reading supported the extension of tax benefits for import and purchase of electric cars for one more year – until 2027. The decision is formalized by amendment No. 1061 to the draft state budget-2026, which was supported by 248 people’s deputies.
The author of the amendment, Dmytro Razumkov, said that the current incentive model “corresponds to the position of the president and the government”. Some MPs opposed it: the chairman of the VRU Committee on Tax and Customs Policy, Daniil Hetmantsev, called the initiative lobbyist and said that it “deprives the army of 30 billion hryvnias”.
What is already known about tax benefits for imports of cars with electronic engines, how much it will cost the state estimates and how it will change the car market in Ukraine, found out "Komersant Ukrainian".
Preferential treatment is valid from January 1, 2019. VAT and import duty are not paid for the customs clearance of cars with an electric engine, and excise duty is set at the rate of 1 euro per kW⋅h of traction battery capacity.
From July 1, 2022, buyers were also exempted from paying the Pension Fund levy on first registration. For vehicles with internal combustion engines, the full set of payments remains: import duty (10% of the customs value), excise duty, VAT and pension levy. It is this difference in the fiscal burden that makes the import of electric cars significantly cheaper than their fuel-powered counterparts.
Market scale: imports, structure and share in the car fleet
As noted by the analytical department of Forbes Ukraine in the material, as of September 1, 2025, 235,595 electric cars were imported into Ukraine, of which 160,731 – already in full-scale war. The share of EVs in the domestic car fleet is estimated at 1.7%.
For comparison, it is about 0.3% in Poland, 0.4% in Slovakia and 1% in Romania.
The monetary volume of imports has tripled over the past three years: in 2024, new electric cars worth $432 million and used cars worth $897 million were imported. Since the start of the incentives, total imports have reached about $4.6 billion, of which more than $4.1 billion will be imported in 2022-2025.
In parallel, domestic demand is also growing: in the summer, Dmitry Derevitsky, co-founder of the Allo marketplace, predicted at least 50% year-on-year growth; in June, the company launched sales of electric cars for the first time.
The fiscal cost of incentives: what the budget is missing out on
Incentives have a tangible fiscal cost. Only since 2022, the state budget has under-received UAH 59.6 billion.
The structure of losses is as follows:
- VAT – 35.5 billion (59.5%);
- import duty – 16.1 billion (27.1%);
- pension Fund levy – 7.5 bln (12.5%);
- excise duty – 0.54 billion (0.9%).
Cumulatively from 2019, the fiscal losses from the preferential regime amount to about UAH 65 billion. Supporters of the extension of benefits note that these amounts are partially compensated by indirect effects – growth of the market of services, development of recharging infrastructure, reduction of imports of petroleum products in the future. Opponents, however, point to the priority of military expenditures and the need for operational budget revenues.
Privileges for electric cars in Ukraine: what you need to know
Initially, the end of the preferential regime was planned for 2025. Against the backdrop of rising demand, in June the Verkhovna Rada registered two alternative bills to extend the benefits for at least a year: No. 13351 (deputies of the “Servants of the People” and “Reasonable Policy”) and No. 13351-1 (“Servants of the People” and “Our Land”). They did not reach the plenary consideration. As a result, the prolongation mechanism was built into the budget process: amendment No. 1061 was supported during the first reading of the state budget-2026.
The benefits sharply lowered the entry barrier for households and small businesses buying EVs as a tool to save on fuel costs. The three-year tripling of imports is occurring despite the war, indicating the resilience of demand. In the used car segment ($897 million in 2024), the benefits are particularly tangible: the absence of VAT and duty critically reduces the final price. At the same time, the infrastructure effect is unfolding slower than sales: the market needs investments in high-speed charging stations, network modernization and service standards. Without this, consumer loyalty may hit a “charging ceiling.”
Read also: Up to 40% rise in price: how the abolition of incentives will affect electric cars
Rada extended the benefits for EVs until 2027: what it means
If the Rada confirms the edit in the second reading, the market will get predictability at least until the end of 2026. For importers, it’s an opportunity to plan deliveries and finance inventory, for dealers to scale sales and after-sales service. For the government, it is a conscious exchange of part of current revenues for structural transformation of the vehicle fleet. The risk is that the concessionary window stimulates a short-term surge in imports, but without parallel investment in infrastructure, the benefits to the economy will be lower than the potential benefits.
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The electric vehicle market in Ukraine: what to look out for in the long term
There are two key events.
First, the second reading of the budget: it is there that the final text will be determined with amendment No. 1061.
Secondly, it is possible to adopt separate bills that will establish transitional mechanisms after 2026: for example, phased tax refunds, targeted support for Ukrainian assembly/localization or differentiation of incentives by car class and battery capacity. It is also important for the government to synchronize tax policy with plans to develop charging infrastructure and power grids, otherwise the infrastructure bottleneck will offset the consumer effect.
Ukraine has imported about $4.6 billion worth of electric vehicles, forming 1.7% of the EV fleet, but has paid a fiscal price of about UAH 65 billion from 2019. The extension of the incentives until 2027 has a chance of being approved along with the 2026 budget, although there is no political consensus. A decision on second reading will determine whether the market gets another year of cheap imports and scaling or rather moves to a post-liberty model with higher taxes and possibly more point incentives.
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