VAT taxation rules for transactions with certain types of transport, defense technologies and in the energy sector have changed from January 1, 2026

Novations in the VAT taxation have come into force in Ukraine for a number of transactions related to transport, defense sector and restoration of energy infrastructure since the beginning of 2026.

Electric transport – with the VAT in general order

VAT will be charged in general order on the import and supply of vehicles equipped exclusively with electric engines to the customs territory of Ukraine from January 1, 2026. This particularly includes tractor units, electric cars and trucks of the corresponding codes of Ukrainian classification of the foreign economic activity products, including those manufactured in Ukraine.

Gas-powered transport – also without the VAT benefits

Under the general VAT order, from 2026, transactions with new vehicles operating on the compressed or liquefied natural gas (methane) or biogas are also be subject to the VAT.

Defense industry benefit: "combat simulators"

At the same time, import and supply of combat simulators used for training and education within the customs territory of Ukraine are exempted from the VAT from January 1, 2026.

Without accrual of tax liabilities for preferential transactions

Also, from January 1, no “compensatory” VAT obligations are accrued (Paragraph 198.5 Article 198 and Article 199 of the Tax Code do not apply) upon sale of the VAT-exempted military products not only within the framework of state contracts, but also within the framework of any other contracts (Sub-paragraph 5 Paragraph 32 Sub-section 2 Section XX of the Tax Code).

Extended VAT benefits for energy recovery

Preferential regime – the VAT exemption for import of equipment necessary for the restoration of Ukrainian energy sector continues until January 1, 2029.