In July 2021, the Ukrainian parliament adopted amendments to the Tax Code of Ukraine, which provide for certain tax exemptions for implementation of electric vehicles (EVs) in Ukraine (EV Tax Amendments). Furthermore, on 6 and 9 July 2021, the Ministry of Infrastructure of Ukraine published on its website for public discussion the draft Law On Amendment of the Law of Ukraine “On Automobile Transport” regarding measures to encourage the use of transport vehicles with electric engines (EV Draft Law) and the draft Law On Amendment of the Law of Ukraine “On Certain Issues of Importing on the Customs Territory of Ukraine and Performance of Initial Registration of Vehicles” (CE Ban Draft Law), which, if adopted, will significantly impact the use of electric vehicles and electric buses in Ukraine.
The text in Ukrainian of the EV Draft Law is available here and the text of the CE Ban Draft Law here.
Please note that public discussion organised by the Ministry of Infrastructure of Ukraine in relation to both the EV Draft Law and the CE Ban Draft Law has recently concluded. The CMU must approve the respective draft laws before they can be registered in Ukrainian Parliament for voting.
EV Tax Amendments
The EV Tax Amendments, among others, provide for the following tax incentives:
- Exception from import VAT and customs duty for between 1 January 2022 and 31 December 2030 for equipment and spare parts manufacturing of EVs, electro buses and electric cargo vehicles, as well as vehicles using natural gas or biogas;
- Until 31 December 2025, sale of EVs, electric cargo vehicles, vehicles and cargo vehicles using natural gas or biogas in the internal Ukrainian market is exempted from VAT;
- Until 31 December 2035, companies that exclusively manufacture electric engines, batteries, charging equipment and EVs, as well as of transport that uses gas are exempted from income tax.
EV Draft Law
The EV Draft Law establishes the regulatory framework for EVs in Ukraine. In particular, the EV Draft Law introduces definitions of the hybrid, plugin-in hybrid, hydrogen and electric vehicles, as well as of electric buses, electric trucks and charge stations. According to the EV Draft Law, development of EVs and their infrastructure should be a priority in state policies in the area of automobile transport.
Furthermore, the EV Draft Law promotes the wide implementation of electric buses instead of regular ones in the following ways:
- Requiring, after 1 January 2030, the exclusive use of electric buses on bus routes of general usage in the regime of regular passenger transportation. The EV Draft Law specifies that battery capacity of such electric buses must cover daily milage without additional recharging;
- Establishing that tenders for rendering passenger transportation services must require fleets of electric buses of at least 20% (after 1 January 2025), 40% (after 1 January 2027) or 80% (after 1 January 2029).
- Although agreements with the winners of the tenders for performance of passenger transportation can be executed from three to five years, tender winners with fleets made up of at least 50% electric buses can execute these agreements up to seven years; and for fleets of more than 50% electric buses, this can be extended up to ten years.
- Transport companies using electric buses must have fleets 90% of which are electric buses of Ukrainian origin with 85% of the passenger seats to be on electric busses of Ukrainian origin.The Register will be established in next three months and will function as a free public database managed by the NBU and accessible via the NBU’s website.
CE Ban Draft Law
The CE Ban Draft Law will further facilitate the wide usage of the EVs. The CE Ban Draft Law, in particular, envisages the ban on import and registration for the first time with Ukrainian state authorities (thus exempting from this requirement vehicles that have been registered with Ukrainian authorities previously) of the following combustion engine vehicles produced either in or outside of Ukraine:
- From 1 January 2027 – used buses and personal vehicles with diesel combustion engines.
- From 1 January 2030 – new and used buses, personal vehicles, cargo vehicles, fire engines, concrete mixers and truck cranes using either gasoline or diesel combustion engines.
The only exception from the aforementioned ban will be for:
- Vehicles necessary for the Ukrainian armed forces and other military formations;
- Vehicles used by farm estates outside of roads of general usage;
- Vehicles that have been obtained through inheritance;
- Vehicles produced before 1981.
For more information on the developments in the Ukrainian electric vehicles sector, contact your regular CMS advisor or local CMS experts: Vitaliy Radchenko, Maria Orlyk.
Source: The text in Ukrainian of the EV Draft Law is available here and of the CE Ban Draft Law here.
Authors:
Vitaliy Radchenko, Partner, vitaliy.radchenko@cms-cmno.com
Maryna Ilchuk, Senior Associate, maryna.ilchuk@cms-cmno.com
Anatolii Doludenko, Associate, anatolii.doludenko@cms-cmno.com
Maria Orlyk, Partner, maria.orlyk@cms-rrh.com
Oleksandra Prysiazhniuk, Senior Associate, oleksandra.prysiazhniuk@cms-rrh.com
Taras Chernikov, Associate, taras.chernikov@cms-rrh.com
