Draft Law No. 16069 proposes a permanent 5% Value Added Tax (VAT) rate on essential food, medicines and children's goods, and a temporary 7% rate on power outage goods. Subject to approval, the changes will apply from 1 January 2027.
Ukraine’s parliament is considering Draft Law No. 16069 of 14 September 2026, which proposes amendments to the Tax Code of Ukraine to reduce VAT rates on food products, medicines, children’s items and other socially significant goods, and to lower costs for consumers. Subject to approval, the law will apply from 1 January 2027.
Permanent 5% rate
The draft law adds subparagraph “ґ” to paragraph 193.1 of Article 193 of the Tax Code, introducing a 5% VAT rate on the following categories.
- Medicines and medical products:
- registered medicines and medical devices meeting official technical regulations;
- medicines and equipment used in clinical trials authorised by the Ministry of Health;
- unregistered medicines imported under expanded patient access programmes, including their subsequent free distribution to healthcare providers and participating patients; and
- preserved or compounded medicines prepared directly in pharmacies according to doctors’ prescriptions or orders from healthcare facilities.
- Specialised and children’s items:
- foods intended for special medical purposes and sanitary hygiene products, according to a list established by the Cabinet of Ministers; and
- baby food, child car seats, strollers, slings, ergonomic backpacks, children’s tableware, basic clothing, footwear and educational stationery.
- Socially significant food products:
- fresh or chilled meat and edible offal (excluding certain industrial categories);
- fresh, chilled or frozen fish (excluding industrial supply);
- milk, dairy products, eggs and natural honey (excluding items with added chocolate, alcohol or confectionery);
- vegetables, fruits and nuts (excluding seed or feed material and candied or glazed products); and
- coffee, tea, spices, retail-packaged cereals, flour, groats, sunflower oil, olive oil, sugar, cocoa powder, pasta, bakery products, yeast, seasonings, pre-packaged water and salt.
The current VAT rate on medical products and pharmaceuticals is 7%. The draft law would permanently reduce it to 5% and expand the scope to cover pharmacy-made medicines, specialised dietary foods for medical purposes, sanitary hygiene products and certain children’s goods.
The permanent 5% rate would also apply to core grocery items from the consumer basket, including meat, fish, dairy, vegetables, fruits, flour, cereals, cooking oil, bread and pasta.
Temporary 7% rate
A new clause, Point 101 of Subsection 2 of Section XX, establishes a temporary reduced 7% VAT rate on goods that support household needs during power outages and blackouts. It will apply until Ukraine achieves full membership in the European Union (EU). The goods covered are:
- Household emergency items: candles, matches, disinfectants, portable gas stoves and burners, gas cartridges, primary batteries, flashlights and lanterns.
- Power equipment: backup power equipment, including electric generator sets, static converters and inverters (excluding inverter welding machines), and lithium-ion storage batteries.
Tax Code and implementation
The draft law updates Article 194.1 of the Tax Code to integrate the 5%, 7% and 14% rates alongside the standard 20% rate into the base tax system.
The Law is scheduled to come into force on 1 January 2027.
The Cabinet of Ministers of Ukraine will have three months from publication of the law to adopt the necessary subordinate regulations and align existing ministerial acts.
