EU May Tighten Conditions on €90B Ukraine Aid Package

April 30 ------ The European Union is considering imposing stricter conditions on part of its €90 billion ($105 billion) aid package for Ukraine, potentially tying payouts to unpopular tax reforms.

On Wednesday, April 29, Bloomberg, citing sources familiar with the matter, reported that the proposed changes, under discussion by the European Commission, would affect €8.4 billion ($9.8 billion) in macro-financial assistance expected this year. The funds are seen as critical to sustaining Ukraine’s economy during Russia’s full-scale invasion.

According to the report, the EU may require Ukraine to revise a preferential tax regime that allows some small businesses to pay a flat 5% revenue tax. The proposal would introduce a 20% value-added tax for companies exceeding a certain income threshold, a move expected to generate more than Hr. 40 billion ($908 million) annually.

Ukraine is also negotiating with the International Monetary Fund (IMF), which is pushing for similar fiscal measures under a separate loan program. Kyiv is reportedly seeking to delay some of these requirements to unlock further funding. Officials argue the current tax system drains wartime revenues, distorts competition, and contributes to a large shadow economy. However, the proposed reforms are expected to face resistance domestically, as they are widely unpopular and have already caused tensions between the Verkhovna Rada and President Volodymyr Zelensky.

Ukraine has already missed a March deadline to implement some of the required tax changes and now faces a June review by the IMF, which will determine whether additional disbursements, including a tranche of about $700 million, will be approved. While the stricter conditions would not affect core defense assistance, they could complicate the disbursement of broader financial support. Ukraine’s finance ministry and the IMF declined to comment on the report.

On April 23, the EU officially approved a €90 billion ($105 billion) loan for Ukraine alongside its 20th sanctions package against Russia, after Hungary and Slovakia lifted their veto. The funding is set to cover roughly two-thirds of Ukraine’s external financing needs for 2026-27, with the remaining gap expected to be filled by G7 partners, the IMF, and bilateral contributions.

Source: kyivpost.com