Business urged the authorities to remove the harmful tax exemption for international parcels as soon as possible
The business community and experts spoke with one voice at the conference “De-shadowing of Retail Trade: New Challenges” organized by the Ukrainian Business Council.
“As part of our efforts to reduce the shadow economy, we support the initiative to lower the tax-free threshold for parcels. We hope that this initiative will be implemented, as it will help reduce the level of shadow economy in the retail sector,” said Oksana Shvets, Head of Taxation and Customs Policy at the American Chamber of Commerce (ACC) in Ukraine.
“We also support the draft law on restricting the import of parcels without taxation, which will help to level the competition in the Ukrainian market,” said Dmytro Mykhailenko, Head of the Tax Committee of the Chamber of Commerce and Industry.
Mr. Mykhaylenko emphasized the urgency of this problem. “Following Black Friday, we conducted a small survey among both legal importers and manufacturers. It seems that legal importers were definitely killed by this Black Friday, they did not expect such a collapse. And legal producers explain this by the cumulative effect of the last five years,” said Dmytro Mykhailenko, according to the Financial Club.
This legal loophole at the Customs gives foreign players an advantage. “We are subsidizing Alibaba, Amazon, Pinduoduo, Temu, and other big players,” says Kasta founder and CEO Andriy Logvin, ”All Ukrainian producers and legal importers are going down online. They are still somehow “breathing” offline.”
“The new US president is going to introduce tariffs. And we don’t have tariffs – we don’t have VAT for foreign goods. This is a direct loss for the state and a distortion of competition,” said Sergiy Badritdinov, CEO of Intertop Ukraine and Chairman of the EBA Committee. “Chinese and Polish companies simply do not pay anything. This problem with parcels is extremely urgent.”
Statistics confirm the rapid aggravation of the problem. “In 2022, there were 23 billion UAH worth of parcels without taxation. In 2023 – by UAH 40 billion. In 2024, we expect UAH 58.9 billion of tax-free parcels. 62% of these imports come from China, 10% from Poland. We are opening our market to import marketplaces, from where these products come here without VAT and no taxes,” said Myroslav Laba, an expert at the Economic Expert Platform.
He cited shocking data. “Out of the 100 largest importers who order these parcels, 81 are individuals. All parcels are under 150 euros. Not a single parcel was taxed. In total, this is 18,765 parcels in 9 months of 2024 – an average of 232 parcels per person. “In fact, every day a person receives a parcel worth 150 euros,” the expert said. ”The total loss to the state budget is about UAH 12 billion, but we believe this is an optimistic figure, since the value of parcels is also underestimated and the real value of goods there is much higher than 150 euros. This is a black hole.”
“We lose at least UAH 15 billion annually from trade that takes place without paying VAT and duties (including goods received through preferential parcels), as well as from the accompanying problem of fragmentation in retail,” said Tetiana Koshchuk, an expert at the Growford Institute.
Inna Boichuk, Director of Strategic Communications at Aurora, co-chair of the ACC Committee, thanked Danylo Hetmantsev for his active fight against shadow markets. “The business community will make efforts to solve the problem of untaxed imports. In just one year, one of the Chinese platforms has increased tax-free imports of goods in small batches from zero to more than 5 million pieces. This greatly changes the situation on the market not in favor of the Ukrainian manufacturer,” she said.
