Ukraine could lift VAT off domestic air transportation services

Infrastructure Minister Vlayislav Krikliy expects that the Verkhovna Rada this year will pass legislation setting a zero rate of value-added tax on domestic air passengers and cargo transportation services.

The comment came as the minister spoke with the Cabinet's envoy to Parliament, Vasyl Mokan.

"Bill 2425 is set to abolish VAT. We're in discussions with the Ministry of Finance and the Committee for Financial and Tax Policy. Actually, I expect that this year we will remove this incomprehensible barrier," he said.

He also noted that the Cabinet was looking for a source through which assistance could be offered to domestic air carriers affected by the coronavirus pandemic.

Read alsoUkraine licenses new local low-cost airline"All European countries, without exception, helped their air carriers in various ways – by offering deferments, acquiring shares, providing interest-free loans, and offering irrevocable financial assistance, while our government found no sources to this end. Therefore, it is very important that we find any kind of source to show that aviation is not some secondary subject to us, that it's a priority, an important industry," the minister said.

Background

On February 4, Prime Minister Denys Shmyhal said the Cabinet was developing mechanisms to support the domestic aviation industry.

In December 2020, Ukraine International Airlines (UIA) called on Ukrainian President Volodymyr Zelensky to instruct the government to develop an action plan to provide the company with repayable financial assistance (a loan or stabilization credit) to pay salaries to employees.

On February 16, 2021, PM Shmyhal promised Ukrainian citizens access to cheap air travel.