The government has once again approved and submitted to the Verkhovna Rada a bill introducing value-added tax (VAT) on international postal shipments to Ukraine valued at up to 150 euros, Prime Minister Serhiy Koretskyi announced on Telegram on Wednesday evening.
“We must create a level playing field for all market participants. This is a matter of supporting Ukrainian manufacturers and ensuring fair competition. We expect this decision to generate over 10 billion hryvnias in additional budget revenue each year,” he noted.
The prime minister emphasized that Ukrainian manufacturers and sellers pay VAT, while some imported goods enjoy tax breaks.
“It is unacceptable that Ukrainian manufacturers—for example, in the light industry—pay taxes, while citizens buy clothing on foreign marketplaces, and those same goods are not taxed at all. It is equally unacceptable that a number of unscrupulous players split up their shipments to evade paying taxes,” the head of government stated.
Koretsky also noted that the repeal of the current exemption will bring Ukrainian regulations into line with European Union legislation.
“Importantly, personal gifts valued at up to 45 euros that are sent free of charge will, as before, remain tax-exempt,” the prime minister added.
According to him, if lawmakers support this decision, the new rules will take effect in 2027, giving businesses, marketplaces, and delivery operators time to prepare.
Separately, Koretsky instructed the Ministry of Finance and all relevant agencies to thoroughly discuss this issue with lawmakers at the committee level and with representatives of all factions and groups, as well as to explain in detail to the public the provisions of the bill and the need for its adoption.
As previously reported, the Verkhovna Rada’s adoption of the bill to abolish the tax exemption for international parcels valued at up to 150 euros is a condition for Ukraine to receive the third tranche under the program with the International Monetary Fund in the amount of approximately 0. 7 billion, and the second tranche of macro-financial assistance from the
European Union in the amount of 3.7 billion euros as part of a 90 billion euro loan to support Ukraine.
In the updated Memorandum on Financial and Economic Policies under the IMF’s EFF program, Ukraine committed to adopting this law by the end of July as a new structural benchmark, whereas the original version required its approval by the end of March along with other tax regulations; however, that structural benchmark was not met.
The State Customs Service of Ukraine transferred UAH 420.1 billion in customs payments to the state budget in the first half of 2026, which is 31.9% more than in the same period last year, the Experts Club information and analytical center reports.
In January–June 2025, revenues amounted to UAH 318.5 billion. Thus, over the year, the budget received an additional approximately UAH 101.6 billion. The official data were published by the State Customs Service on July 13, 2026.
The Experts Club Analytical Center compared the State Customs Service’s data with the Ministry of Finance’s operational report on the execution of the state budget for January–June 2026.
Ranking of Customs Revenues by Main Categories
Value-added tax on goods imported into the customs territory of Ukraine remains the main source of customs revenues.
It accounted for approximately 75.7% of all payments transferred by the State Customs Service in the first half of the year. In other words, approximately three out of every four hryvnias of customs revenues were generated by import VAT.
The high share of VAT is explained by the fact that the tax is charged on virtually all taxable imports, including equipment, raw materials, fuel, cars, consumer goods and products intended for industrial use.
After deducting import VAT and customs duties from the total amount, approximately UAH 70.9 billion, or 16.9% of revenues, remains.
The main part of this amount should consist of excise duty on imported excisable goods, primarily petroleum products, cars, alcoholic beverages and tobacco products.
However, in its operational report, the Ministry of Finance indicated only the total excise tax revenues from domestically produced and imported goods — UAH 152.4 billion. The separate amount of import excise duty was not disclosed in the report. Therefore, the figure of UAH 70.9 billion is an estimate and may also include small amounts of other payments administered by customs authorities.
Revenues from import and export duties in the first half of the year amounted to UAH 31 billion, or approximately 7.4% of the total volume of customs payments.
The share of customs duties is significantly lower than that of import VAT because zero or reduced rates apply to many goods under Ukraine’s free trade agreements. In addition, certain categories of equipment, energy products and defense-related goods benefit from tax and customs exemptions.
Structure of Ukraine’s Customs Revenues
Thus, the approximate structure of the UAH 420.1 billion is as follows:
VAT on imported goods — UAH 318.2 billion, or 75.7%.
Import excise duty and other payments — approximately UAH 70.9 billion, or 16.9%.
Import and export duties — UAH 31 billion, or 7.4%.
The Experts Club calculation shows that Ukrainian customs primarily performs the function of administering import VAT. Customs duties themselves account for less than one-tenth of the total volume of revenues.
Cars Accounted for More Than 7% of All Payments
Imports of passenger cars brought UAH 32.1 billion to the state budget in the first half of the year. This corresponds to approximately 7.6% of all revenues transferred by the State Customs Service.
At the same time, petrol-powered cars alone generated UAH 14.6 billion, or approximately 3.5% of all Ukraine’s customs revenues for the six-month period.
Thus, payments from passenger car imports exceeded the total revenues from import and export duties across all product categories.
Large Importers Accounted for 85% of Revenues
In the first half of the year, customs payments were made by 28,300 foreign economic activity participants. Their number increased by 2.5% compared with January–June 2025.
At the same time, only 2,350 companies, or approximately 8% of all payers, accounted for 85% of revenues. Their combined contribution can be estimated at approximately UAH 357 billion.
Another 10,600 enterprises, each of which transferred between UAH 1 million and UAH 20 million, generated UAH 53.5 billion.
Approximately 15,300 representatives of small and medium-sized businesses paid up to UAH 1 million each. Their combined contribution amounted to almost UAH 4.8 billion.
This indicates a high concentration of customs revenues: the majority of revenues depend on a relatively small group of large importers of fuel, cars, machinery, raw materials, pharmaceuticals and consumer products.
Customs Accounted for More Than One-Fifth of General Fund Revenues
In January–June 2026, UAH 1.898 trillion was received by the general fund of Ukraine’s state budget. Customs payments amounting to UAH 420.1 billion were equivalent to approximately 22.1% of this amount.
Including the general and special funds, state budget revenues for the first half of the year amounted to UAH 2.52 trillion.
The 31.9% growth in customs revenues significantly outpaced the increase in the number of payers, which amounted to only 2.5%. This indicates that the main growth factors were an increase in the value of taxable imports, changes in the exchange rate, an increased tax burden on certain categories and higher payments from the largest companies.
The most comprehensive official source of detailed information by budget classification codes is the state Open Budget portal. The State Customs Service publishes the total volume of payments and the structure of payers, while the Ministry of Finance publishes the main tax categories. At the time this material was prepared, a separate comprehensive table from the State Customs Service showing the distribution of the UAH 420.1 billion across all types of payments in a single document had not been published.
Ferrexpo plc, a mining and ore company with its main assets in Ukraine, produced 1,385,139 metric tons of pellets in January–June of this year, which is 36% lower than in January–June of last year (2,169,631 metric tons), but in the second quarter, it increased production of this product by 64% compared to the first quarter—to 860,213 thousand metric tons from 524,926 thousand metric tons.
According to the company’s press release on Wednesday, total production of marketable products (pellet and iron ore concentrate) for the first half of 2026 fell by 54% compared to the first half of 2025—to 1,556,160 thousand metric tons. In particular, production of premium-grade Fe67% concentrate amounted to 171,021 thousand metric tons, compared to 1,223,504 thousand metric tons (a decrease of 86%). The company also produced 1,221,968 thousand metric tons of premium-grade pellets (a 41% decrease) and 163,171 thousand metric tons of DR pellets (compared to 81,787 thousand metric tons produced in the first half of 2025).
The press release notes that the group continues to operate under significant constraints caused, in particular, by serious operational and financial risks related to the war in Ukraine. These factors include the mobilization of a significant portion of the workforce into the Armed Forces of Ukraine, as well as disruptions and restrictions in logistics, as a result of which only one iron ore pellet production line is currently in operation.
The group continues to focus on cost management and operational activities to preserve working capital amid significant constraints. At the same time, the Group continues to optimize its product mix (the ratio of pellet production to concentrate production) and manage the allocation of shipments among customers. In addition, operating expenses have been reduced across all business lines over an extended period, a situation that will require a solution in the future.
As a result of these measures, as of June 30, 2026, the Group’s available cash balance stood at approximately $27 million (excluding funds held at MBaer Merchant Bank (MBaer), whose banking license was revoked in February 2026). As of June 30, 2026, the Group’s net cash position (excluding lease obligations) was approximately $21 million (for comparison: as of March 31, 2026, this figure was approximately $25 million; as of December 31, 2025, it was $47 million; as of June 30, 2025, it was $50 million; and as of December 31, 2024, it was $101 million).
Given the measures taken by the Group, as well as current production volumes, actual and projected energy prices for the next quarter, and an optimized sales structure, the Group forecasts that its available net cash (net of lease obligations and funds locked up in MBaer) will be sufficient to continue operations under the current challenging conditions until the beginning of the fourth quarter of 2026. This forecast depends on the volatility of iron ore prices and operating expenses (particularly energy costs) and is based on the assumption that there will be no material changes in the Group’s operating conditions (including energy supply) Furthermore, the arbitration administrator appointed as part of the Poltava Mining and Processing Plant’s bankruptcy proceedings will not impose restrictive measures, and there will be no final, non-appealable adverse decisions in the various judicial and administrative proceedings to which the Group is currently a party.
The Group remains in a precarious financial position and is implementing cost-cutting measures across all areas of its operations, particularly with regard to operating and capital expenditures. In addition, significant operating expenditures have been deferred, particularly those related to the optimization of mining operations, repairs, and maintenance of processing and pellet production facilities, as well as mining equipment.
Against this backdrop, the group is maintaining its workforce at 6,299 employees to retain the skilled professionals needed to manage flexible production volumes in response to market demand. This figure currently includes 804 employees serving in the Armed Forces of Ukraine.
The press release states that the Group’s VAT refunds have been suspended since March 2025. As a result of this suspension, as of June 30, 2026, VAT receivables in Ukraine amounted to $90.4 million (net of related provisions); (for comparison: as of March 31, 2026, this figure stood at $90.3 million). Of this amount, as of the date of this announcement, $87.5 million had been claimed for refunds covering the period from January 2025 through June 2026, with the Ukrainian tax authorities having denied refunds for approximately $80.8 million (relating to the period from January 2025 through April 2026).
The company is in negotiations with Ukrainian authorities to find a long-term solution to the issue of obtaining VAT refunds. Although the company is striving to reach an agreement, given the complexity of the situation, the possibility of reaching such an agreement and the timeline for its implementation remain uncertain, according to the press release.
The company also provides an update on the status of its legal proceedings. Specifically, regarding the long-standing legal dispute between “Maxi Capital Group” Financial Company LLC (Maxi Capital) and PGZK regarding disputed guarantee agreements and a claim in the amount of 4.727 billion hryvnia (approximately $105.4 million as of June 30, 2026), the group reports that the main claim is currently being considered by the Supreme Court of Ukraine. On May 1, 2026, the court expanded the panel to 17 judges. The next court hearing in this case is scheduled for October 12, 2026.
Proceedings in the PGZK bankruptcy case: Following the local court of first instance’s decision on February 24, 2026, to open bankruptcy proceedings based on Maxi Capital’s petition, PGZK filed an appeal against that decision. Following the official recusal of the original three-judge panel on April 30, 2026, a new panel was appointed. During the hearing on June 2, 2026, the appellate court heard the parties’ arguments and scheduled the next hearing for July 27, 2026.
The company has updated information regarding its financing options. The Board of Directors continues to believe that raising equity capital is currently the most viable solution within the required timeframe. This capital raise will likely be structured as a conditional placement of new shares among certain existing and new institutional investors with the aim of raising at least $100 million. These funds are necessary to maintain the Group’s working capital levels, meet its short-term operational needs, increase production volumes, and carry out previously deferred work on deposit development (overburden removal) and capital expenditures while operating at reduced capacity over the next 18 months. The Group is actively working on a series of measures necessary to begin implementing the planned capital raise.
The Company continues negotiations with representatives of its largest shareholder—Fevamotinico S.a.r.l.—regarding its participation in the equity financing. At this stage, there is no certainty that the Group will be able to successfully carry out the planned fundraising. If the issues regarding the delay in VAT refunds and financing problems are not resolved in a timely manner, this could lead to serious negative consequences for the Group. In particular, the Company or Group entities may be forced to file for insolvency in the relevant jurisdictions, and shareholders may lose all or a significant portion of their investments.
Regarding the delay in the publication of the audited financial statements for 2025, the listing, and trading of the Company’s shares: Given that the preparation of the financial statements for the year ended December 31, 2025, under the going concern assumption, depends on the successful completion of the planned capital raising, the Company has not yet been able to publish its audited financial results for that period. The results for the 2025 fiscal year are expected to be released concurrently with the launch of the planned capital raising process.
Following the release of the results for the 2025 fiscal year, the company will apply to the UK Financial Conduct Authority (FCA) to lift the suspension of its listing, thereby allowing trading in the company’s shares to resume.
Commenting on the group’s performance, interim acting chairman Lucio Genovese stated, “We are very pleased that we were able to restore stable production during this period, despite the numerous operational and logistical challenges we faced.”
“We took the opportunity to improve our sales mix through exports of direct-recovery pellets (DR pellets/FDP) and continue to cut costs across the entire company to preserve our available working capital, which is being depleted due to the lack of VAT refunds starting in March 2025. We are continuing our efforts to raise capital, which is the most viable solution for addressing the working capital shortfall,” Genovese noted.
As previously reported, Ferrexpo produced 3,221,461 metric tons of pellets in 2025, which is 47% less than in the previous year (6,070,541 metric tons). At the same time, total production of marketable products (pellets and iron ore concentrate) for 2025 decreased by 9% to 6,141,759 thousand metric tons. Specifically, marketable concentrate output amounted to 2,920,298 thousand metric tons, compared to 709,803 thousand metric tons, respectively. The company also produced 81,787 thousand metric tons of DR pellets (compared to 489,720 thousand metric tons in 2024) and 3,139,674 thousand metric tons of premium-grade pellets (a 44% decrease).
In 2024, Ferrexpo increased pellet production by 58% compared to 2023—to 6,070,541 metric tons from 3,845,325 metric tons. In 2023, the company produced 3.845 million metric tons of pellets, which is 36.5% less than in 2022.
Ferrexpo owns a 100% stake in Yeristivsky Mining and Processing Plant LLC, a 99.9% stake in Bilanivsky Mining and Processing Plant LLC, and 100% of the shares in Poltava Mining and Processing Plant PJSC.
FERREXPO, MINING AND PROCESSING PLANT, PELLETS, PRODUCTION, VAT
Ukraine plans to introduce taxation on international mail shipments, which effectively marks the end of the era of “cheap packages” from foreign online stores. These changes are part of a new legislative approach to taxing cross-border e-commerce.
This involves the introduction of value-added tax (VAT) on goods ordered by Ukrainian consumers from abroad. Currently, there is a duty-free import threshold of EUR150; however, the new model envisages a gradual transition to taxing virtually all parcels, regardless of their value.
The main goal of the changes is to level the playing field between Ukrainian and foreign online sellers, as well as to increase tax revenues for the budget. Under the current system, foreign marketplaces and sellers often do not pay VAT when selling goods to Ukrainian consumers, which creates a price advantage over local businesses.
The new model is expected to be implemented based on a principle similar to the European Union’s practice, where VAT is levied at the time of purchase, and the obligation to pay it may be imposed on sellers or e-commerce platforms. This means that platforms such as international marketplaces will have to register as taxpayers in Ukraine or operate through intermediaries.
Experts note that the introduction of VAT on parcels will lead to higher prices for end consumers, particularly in the segment of inexpensive goods, which are currently ordered en masse from foreign platforms. At the same time, the government expects increased market transparency and higher budget revenues.
Simultaneously, the changes may stimulate the development of domestic e-commerce and local manufacturers, who will benefit from a more level playing field. However, some consumers may reduce their order volumes or switch to alternative purchasing channels.
Changes are also expected in the logistics sector: postal delivery operators will be involved in tax administration, including possible verification of the value of goods and interaction with customs authorities.
Thus, the cross-border e-commerce market in Ukraine is entering a phase of structural change. In the short term, this will lead to higher prices for imported goods for consumers, and in the long term, it may shift the balance between foreign and local online sellers.
Ferrexpo plc, a mining company with its main assets in Ukraine, produced 2 million 808,594 thousand tons of pellets in January-September this year, which is 38.5% less than in the same period last year (4 million 567,168 thousand tons).
According to the company’s press release on Monday, total production of commercial products (pellets and iron ore concentrate) for the first nine months of 2025 increased by 0.9% to 5 million 67,888 thousand tons. In particular, the output of commercial concentrate amounted to 2 million 259,294 thousand tons against 457,264 thousand tons, respectively. The company also produced 81,787 thousand tons of DR pellets (326,168 thousand tons in the first nine months of 2024) and 2 million 726,807 thousand tons of premium pellets (a decrease of 35.7%).
The press release notes that due to the ongoing suspension of VAT refunds, the total amount of VAT withheld currently stands at $47 million. Due to the resulting reduction in financial liquidity, the group was forced to reduce production to a single rolling mill line, but was able to increase production of low-alumina Fe67% concentrate to meet demand from Chinese customers.
As a result, total commercial production for the quarter reached 1.51 million tons, up 3% from 1.46 million tons in the second quarter and down 29% from 2.1 million tons in the first quarter.
It is also noted that the group continued to work actively to reduce overall cash expenditures. This included reducing working hours for employees, continuously reducing purchases of goods and services, and suspending all non-essential capital expenditures, overhead costs, and corporate social responsibility (CSR) expenses.
Commenting on the group’s performance, interim CEO Lucio Genovese noted that the third quarter of 2025 was the first quarter in which the company fully felt the impact of the Ukrainian tax authorities’ decision to suspend VAT refunds to Ukrainian subsidiaries.
“Despite the further reduction of pelletizing capacity to one line, we achieved a total production volume of 1.5 million tons for the quarter. Production for the first nine months of 2025 was comparable to the same period last year, totaling 5.1 million tons. High demand from Chinese customers for our high-quality low-alumina concentrates allowed us to increase production by 36% compared to the previous quarter and almost four times since the beginning of the year compared to the same period last year,” the top manager said.
At the same time, he pointed out that the tax authorities’ refusal to refund VAT remains the most important problem for the business. He recalled that the group had received official notifications from the tax authorities about the suspension of VAT refunds from March 2025 for the period beginning in January 2025. Similar notifications were received every month until July, and the total amount of unrecovered VAT for this period is $47 million. If VAT refunds are also suspended for August and September, the estimated total amount of unrecovered VAT will be $58 million.
At the same time, cost-cutting measures introduced in the second quarter continued in the third quarter. At the end of September, approximately 20% of employees were on leave or had reduced working hours.
During the third quarter, VAT issues were exacerbated by Russia’s intensified air attacks on Ukraine’s railway network and domestic energy infrastructure. These issues create additional challenges in managing operations and logistics.
Ferrexpo produced 2 million 169,631 thousand tons of rolled products in the first half of 2025, which is 34.2% less than in January-June 2024 (3 million 297,441 thousand tons). Total production of commercial products in the first half of 2025 decreased by 9% compared to the first half of 2024, to 3 million 393,135 thousand tons. In particular, the output of commercial concentrate amounted to 1 million 223,504 thousand tons against 429,865 thousand tons, respectively. The company also produced 81,787 thousand tons of DR pellets (in the first half of 2024 – 162,645 thousand tons) and 2 million 87,844 thousand tons of premium pellets (a decrease of 33.4%).
In Q1 2025, Ferrexpo produced 1 million 347,749 thousand tons of pellets, which is 26% less than in January-March last year (1 million 813,973 thousand tons). At the same time, total production of commercial products (pellets and iron ore concentrate) in Q1 2025 increased by 3% compared to Q1 2024, reaching 2 million 125,467 thousand tons. In particular, the output of commercial concentrate amounted to 777,718 thousand tons, compared to 240,516 thousand tons in Q1 2024. The company also produced 81,879 thousand tons of DR pellets (not produced in Q1 2024), 1 million 105,049 thousand tons of premium pellets (a decrease of 36%), and 160,913 thousand tons of other pellets (an increase of 95%).
In 2024, Ferrexpo increased its production of pellets by 58% compared to 2023, from 3 million 845,325 thousand tons to 6 million 70,541 thousand tons.
Ferrexpo owns 100% of Yeristovsky GOK LLC, 99.9% of Bilanovsky GOK LLC, and 100% of Poltavsky GOK PJSC.
Mining company Ferrexpo plc, with its main assets in Ukraine, ended January-June this year with a net loss of $196.004 million, compared with a net profit of $55.490 million in the same period last year.
According to the company’s interim report on Wednesday, the pre-tax loss for the period was $186.899 million, compared with a pre-tax profit of $75.671 million in January-June 2024.
Revenue in the first half of 2025 decreased by 17.5% to $452.607 million. At the same time, EBITDA amounted to $3.890 million compared to $79.043 million at the end of June 2024 and $69.310 million at the end of 2024.
Cash and cash equivalents at the end of June 2025 amounted to $52.262 million, at the end of June 2024 – $115.131 million, and at the end of 2024 – $105.919 million.
The report states that the group’s underlying EBITDA remained positive at around $4 million for the first half of 2025, despite losses for the period, although this is significantly lower than for the same period in 2024. The sharp decline was mainly due to lower operating profit as a result of an adjusted lower production plan following the refusal to refund VAT in Ukraine and lower realized prices, which could not be offset by the effects of lower C1 production costs and further cost-cutting measures initiated by the group during the second quarter of 2025.
Commenting on the group’s performance, interim CEO Lucio Genovese noted that the company started the year on a strong footing, with its best quarterly production since the full-scale invasion of Ukraine in February 2022. However, this momentum was significantly curtailed in the second quarter as the group was forced to reduce its activities due to the decision by the Ukrainian tax authorities to suspend VAT refunds to its subsidiaries. This is reflected in a 40% drop in production in the second quarter compared to the first quarter.
“We quickly took steps to reduce our costs. We have now had to reduce working hours or send approximately 40% of our employees on leave. We have also implemented programs to optimize the speed of disclosure, repair, and maintenance, and have reduced non-essential expenses across the business. These actions were necessary and mitigated the serious negative impact of the suspension of VAT refunds. We have managed to reduce our costs as much as possible to remain competitive in the face of low iron ore prices,” Genovese said.
He added that since the full-scale invasion of Ukraine in February 2022, Ferrexpo has continued to operate and export its products despite the enormous challenges caused by the war.
As reported, Ferrexpo posted a net loss of $50.03 million in 2024, down 41% from $84.753 million in 2023. Revenue for 2024 amounted to $933.263 million, compared to $651.795 million in 2023 (an increase of 43.2%). EBITDA amounted to $69.310 million, compared to $98.871 million adjusted for 2023. Cash and cash equivalents at the end of 2024 amounted to $100.835 million, compared to $108.293 million at the end of 2023, $106.397 million in 2022, and $117 million at the end of 2021.
Ferrexpo ended 2023 with a net loss of $84.753 million compared to a net profit of $219.997 million in 2022, which is four times lower than the profit in pre-war 2021 ($870.993 million). Revenue for 2023 amounted to $651.795 million, compared to $1 billion 248.490 million in 2022 (a decrease of 47.8%). At the same time, EBITDA fell by 83% to $130.242 million compared to $765.113 million in 2022.
Ferrexpo owns 100% of Yeristovsky GOK LLC, 99.9% of Bilanovsky GOK LLC, and 100% of Poltava GOK PJSC.
