Ukraine is preparing to commit to a wartime tax overhaul—extending a 5% levy on income, ending tax breaks on imported parcels and digital-platform earnings, and tightening the simplified tax system small businesses use—as a condition attached to a €90 billion ($104.4 billion) EU loan.
President Volodymyr Zelenskyy submitted the draft law to Parliament on 28 May 2026. The first €3.2 billion ($3.7 billion) installment is within reach, and MP Yaroslav Zheleznyak said a vote could come within hours.
The conditions are part of a macro-financial assistance tranche worth €8.35 billion ($9.7 billion), paid in three installments, each released only after Ukraine raises more revenue.
Ratification is the last step on Ukraine’s side before a loan that has spent months blocked in Brussels can finally start paying out. It binds Kyiv to the terms; enacting each tax measure is a separate fight still ahead.
The conditions are part of a macro-financial assistance tranche worth €8.35 billion ($9.7 billion), paid in three installments, each released only after Ukraine raises more revenue from an economy already drained by war. The European Commission signed the memorandum on 21 May 2026, and Commissioner Valdis Dombrovskis said the loan is “tied to clear reform conditions.”
What Kyiv must do
Most of the demands fall on Ukrainians at home. To clear the first installment, the government must submit bills scrapping the tax exemption on international parcels and taxing income earned through digital platforms, extend the 5% military levy—worth at least 140 billion hryvnias ($3.2 billion) a year—for three years, update its public-finance strategy, and appoint a permanent head of the State Customs Service.
The second installment ties payment to laws taxing digital-platform income and property, alignment of corporate tax with the EU’s anti-tax-avoidance rules, a plan to improve VAT compliance, and a 2027–2029 budget framework.
Throughout, the deal also binds Kyiv to safeguard democratic institutions and central bank independence, and to keep its anti-corruption measures “irreversible.”
The third reaches into the domestic economy: a reform of the preferential tax regime worth at least 70 billion hryvnias ($1.6 billion) a year, including curbs on firms that split up to stay on simplified taxation and differentiated rates for third-group sole proprietors, alongside a new Customs Code, a public-procurement strategy, and an overhaul of the State Audit Service.
Throughout, the deal also binds Kyiv to safeguard democratic institutions and central bank independence, and to keep its anti-corruption measures “irreversible,” with regular reporting to the Commission.
Most of the loan is for weapons
The loan covers about two-thirds of Ukraine’s estimated funding needs for 2026 and 2027. The IMF, for its part, approved a four-year, $8.1 billion program in February 2026, releasing $1.5 billion at once, and is counting on EU money to help close Ukraine’s $52 billion financing gap this year.
The EU raises money on capital markets and services the debt from the interest earned on about €210 billion ($243.6 billion) in frozen Russian sovereign assets.
The wider €90 billion package leans toward defense, with around €60 billion ($69.6 billion) for weapons and €30 billion ($34.8 billion) for the budget. The EU raises money on capital markets and services the debt from the interest earned on about €210 billion ($243.6 billion) in frozen Russian sovereign assets held at Belgium’s Euroclear, with Kyiv repaying the principal only if Moscow pays war reparations.
The package cleared Brussels in April 2026, after Hungary’s two-month veto collapsed in the wake of Viktor Orbán’s election defeat.
