Ukraine has been granted a reprieve on the parcel law: what concessions did the IMF make?
5 June 16:18
The IMF has agreed to extend the deadline for passing the law on parcel taxation until the end of July, thereby removing the risks to Ukraine’s receipt of the next loan tranche in the amount of $686 million. This was reported by RBC-Ukraine, citing sources familiar with the results of the IMF mission in Kyiv, which is set to conclude this week, according to "Komersant Ukrainian".
Initially, the law on parcel taxation was supposed to be adopted by the end of March. And this condition was mandatory for the continuation of financing.
As recently as last week, the publication’s sources said that the IMF categorically refused to make concessions. Without the adoption of this law, the release of the second tranche would have been impossible.
However, according to the latest information, the IMF mission changed its position in the final stage of its work and agreed to postpone the deadline for adopting the document until the end of July. This means that the second tranche will not depend on the results of the bill’s consideration in the Rada.
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As sources told RBC-Ukraine, the lender’s experts were convinced that additional work with lawmakers is necessary to secure support for the bill in the Rada.
The negotiations were difficult, the source noted. The IMF made it clear that there would be no further concessions on this issue.
“The IMF sent a clear message that this was the last time they would do this,” said a source familiar with the negotiation process.
According to the negotiators, the Fund took into account the political and economic realities surrounding this initiative. In particular, the lack of prospects for the bill’s swift adoption in the Rada due to weak support among lawmakers.
Currently, the government and the relevant tax committee will most likely attempt to hold active consultations with lawmakers and build support for the upcoming vote.
In late May, Finance Minister Serhiy Marchenko and Tax Committee Chair Danylo Getmantsev spoke about the need to intensify efforts to reduce the negative perception of parcel taxation both among the public and among lawmakers.
However, sources interviewed by the publication acknowledge that there is currently no consensus in the Rada.
The next review of the IMF program will take place at the end of August. By that date, the law on the taxation of all parcels must be adopted.
In effect, this leaves lawmakers about a month and a half to do so. In the second half of July, they will take a break from legislative work until September.
IMF Not Opposed to Bank Tax
As part of the mission’s work, the issue of raising the corporate income tax rate for banks from 25% to 50% was also discussed. This tax was implemented as a temporary measure in 2023–2024 and is in effect this year.
It significantly increases budget revenue. In the first quarter of 2026 alone, the banking sector is expected to transfer approximately 27 billion hryvnias to the treasury.
The tax increase was initiated by members of parliament. The NBU and commercial banks oppose it.
According to sources, the IMF generally does not support such initiatives. However, if the Rada decides to raise the tax, they will not object given the need to increase domestic sources of revenue for the treasury.
“They won’t object. We will pass the law,” summarized one of the sources familiar with the negotiations.
Tax on digital platforms
Bill No. 15111-d on the taxation of income from digital platforms is scheduled to be adopted by the Rada next week.
The document has been discussed and revised to incorporate feedback from the business community and alternative proposals from lawmakers.
Further coordination with the IMF
Based on the mission’s findings, a so-called staff-level agreement is expected to be prepared. This document formalizes preliminary agreements between the Ukrainian side and the Fund’s mission. It also includes an assessment of progress made in fulfilling the program’s conditions.
Following the publication of the SLA, the issue of further financing will be submitted to the IMF Executive Board for consideration. It is the Board that makes the final decision on the disbursement of the next loan tranche.
The IMF has made concessions for the third time
During the preparation of the new program, the IMF has repeatedly demonstrated a degree of flexibility. It has softened the conditions regarding the tax package.
At the beginning of the year, the IMF removed mandatory conditions for concluding the program. It then agreed to postpone the most contentious issue—the introduction of VAT for sole proprietors—until 2028.
As a reminder, the new $8.1 billion Extended Fund Facility (EFF) program for Ukraine was approved in late February of this year. Ukraine received the first tranche of the loan, amounting to $1.5 billion, in March.
The EFF program provides for four tranches in 2026 totaling $3.83 billion: $686 million each in June and September, and $960 million in December.
In 2027, there will be two tranches: $880 million each in June and December.
In 2028, there will be two tranches: $440 million in June and $470 million in December.
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