E-commerce VAT bill limits PEP status to three years, tightens rules for state banks

Bill No. 15112-1 on VAT on e-commerce transactions, which proposes scrapping the VAT exemption for international postal items worth up to EUR 150, also provides for ending lifetime politically exposed person (PEP) status for officials of international organizations by limiting it to three years after they leave office.

The relevant provisions are contained in the comparative table to bill No. 15112-1, which the specialized committee recommended for first reading on Monday, April 6.

Under the document, PEP status for persons performing public functions in international organizations - including directors, board chairs, their deputies, members of parliamentary assemblies and judges of international courts – would remain in force for only three years after the end of their term.

In addition, the bill expands the list of persons equated to officials authorized to perform state functions, including the chair and members of a bank's management board, as well as the officer responsible for financial monitoring at banks where the state holds more than a 50% stake. It also proposes adding officials and inspectors of the Public Oversight Body for Auditing Activity and members of the Council of the Audit Chamber of Ukraine.

The document introduces a new taxation model for parcels worth up to EUR 150 purchased through electronic interfaces, or platforms, under which the obligation to assess and pay VAT is imposed directly on the marketplace or its intermediary if the company is a nonresident. At the same time, marketplaces would be exempt from issuing tax invoices and filing tax returns for such transactions, but would be required to keep detailed records. Where the seller is a nonresident, the amount of tax would be determined in euros or U.S. dollars, and the tax liability would arise on the day the buyer's payment is received.

The bill also clarifies tax benefits for the defense sector by removing the words "without weapons" from the VAT exemption on imports of unmanned aerial vehicles, which would allow drones of any type to be supplied without tax during martial law.

For non-commercial shipments between individuals, the bill provides a VAT exemption for parcels worth up to EUR45, provided they are free of charge and intended exclusively for personal or family use.

As reported, bill No. 15112-1 is a structural benchmark under the new program with the International Monetary Fund. Its main provision concerns abolishing the VAT exemption for international parcels worth up to EUR 150, although these rules are not expected to take effect before 2027.

According to MP Yaroslav Zhelezniak, unlike the original version of the bill, the alternative version does not restrict the EUR 45 exemption rule for shipments of perfumes, coffee and tea.