A number of MPs offer exemption from payment of value added tax (VAT) and import duties from January 1, 2021 to December 31, 2028 for equipment and components intended for internal production of electric vehicles (passenger cars, electric buses, electric trucks and special vehicles).

Relevant bill No. 3476 on amendments to the Tax Code and bill No. 3477 on amendments to the Customs Code with the purpose to promote development of the electric transport industry were registered in the Verkhovna Rada on May 14.

Authors of these bills are Chairman of the Verkhovna Rada Committee on Financing, Tax and Customs Policy and member of Dovira (Trust) parliamentary group Danylo Hetmantsev, Leader of Dovira (Trust) parliamentary group Oleh Kulinich and member of this parliamentary group Robert Horvat, member of European Solidarity faction Stepan Kubiv and member of Za Maibutnie (For the Future) parliamentary group Yaroslav Dubnevych.

The proposed exemption will not apply only to equipment for the production of trolleybuses, because their output has already been established in Ukraine.

In addition, bill No. 3476 proposes to exempt the electrical industry companies selling electric motors for the production of electric vehicles (with the exception of trolleybuses), lithium-ion batteries, chargers, as well as automobile companies selling electric cars of their own production from paying income tax until December 31, 2033.

The bill proposes to extend or expand benefits for importers and buyers of electric vehicles.

It is proposed, in particular, to extend the VAT exemption for import and/or supply of electric cars until December 31, 2025 (currently the benefit is valid until the end of 2022).

A buyer of an electric car before December 31, 2030 is also offered to be exempted from paying the mandatory pension insurance fee, be provided with a tax discount on the payment of personal income tax, but these standards are proposed to be introduced from January 1, 2026.

According to an explanatory note to the bills, there is a sufficient industrial potential of Ukraine in the production of electric vehicles. In particular, there are five bus plants, a truck plant, and the facilities, which produce 300,000 passenger cars at three plants.

However, today the government is stimulating the import of electric vehicles, not their production. In particular, from January 1, 2016, there is no import duty, exemption from VAT is extended until 2022 and the excise rate is set at EUR 1 per 1 kW/h of battery capacity.

"The introduction of preferential taxation increased the import of electric vehicles from 1,706 vehicles in 2016 to 7,542 vehicles in 2019, but used electric vehicles are dominating in the market (93% in 2019)," the authors of the bills said.

In this regard, the main task of the bills is to create conditions for involving investment in the production of electric vehicles, chargers, components for them, as well as stimulating demand for buses, passenger cars and trucks exclusively with electric motors.