AMCU Proposes Revising Fuel Taxes Due to Rising Global Prices

The Antimonopoly Committee has proposed that the Cabinet of Ministers temporarily adjust fuel taxes in light of rising global prices. Taxes account for more than 40% of the retail price of gasoline and diesel fuel, which could weaken competition and push small gas station operators out of the market. On August 6, the AMCU reviewed the state of competition in the markets for light petroleum products, noting that global indices and prices for petroleum products have risen by more than 100%. The purchase cost of fuel in Ukraine accounts for nearly half of the retail price, while more than 40% is tax burden, including VAT and excise tax. The increase in global prices raises the VAT amount, leading to higher retail prices for consumers. This creates a need for the formation of minimum stocks of oil and petroleum products. The AMCU believes that the simultaneous increase in purchase costs, taxes, and reserve expenses worsens the competitiveness of operators. Small gas station networks will be the most affected, which could lead to companies exiting the market and increased concentration. The AMCU has suggested that the Cabinet improve its response to crisis phenomena in the fuel market, including revising the taxation of transactions for forming minimum stocks. A decision on changing the tax regime has not yet been made. Wholesale prices for diesel fuel in Ukraine have decreased, reducing the risk of its price rising to 100 UAH per liter; however, supply issues remain.