--- title: "Kyiv considers raising VAT to create a $2–3 billion insurance fund: what is known" description: "Ukraine's Economy Minister Oleksandr Kravchenko stated that the Cabinet of Ministers is considering raising VAT to create a $2–3 billion insurance fund. No final decision has been made, but the option is regarded as the most realistic for quickly mobilizing funds." date: 2026-09-12T12:04:00.000Z lang: en url: https://xab.info/en/posts/kyiv-considers-raising-vat-to-create-insurance-fund-en tags: [ukraine, vat, tax-policy, business-support, war-economy, insurance-fund] publisher: "XAB.info" --- # Kyiv considers raising VAT to create a $2–3 billion insurance fund: what is known ![Portrait of an official amid discussions on raising VAT in Ukraine to create a $2–3 billion insurance fund](https://xab.info/media/2026/09/12/kiev-rassmatrivaet-povyshenie-nds-dlya-sozdaniya-strokhovogo-fonda/kiev-rassmatrivaet-povyshenie-nds-dlya-sozdaniya-strokhovogo-fonda-1.webp) ## 🎯 Key Points - Ukraine's Cabinet of Ministers is considering raising VAT as a source for funding a business insurance fund - The fund's initial capital is estimated at $2–3 billion, while business losses in 2026 could reach up to $10 billion - No final decision on raising VAT has been made; discussions are ongoing with the Ministry of Finance and the relevant Rada committees Ukraine's Minister of Economy and Environment, Oleksandr Kravchenko, stated that the Cabinet of Ministers is considering the possibility of raising the value-added tax (VAT) rate as one of the tools for funding a new insurance fund designed to compensate Ukrainian businesses for losses incurred as a result of Russian attacks. According to the minister, launching the compensation mechanism requires a substantial initial capital — by his estimate, no less than $2–3 billion. This is reported by RBC-Ukraine, citing Kravchenko's direct statements. ### The insurance fund mechanism and funding sources According to the minister, the compensation fund is planned to be formed from several sources: state budget funds, aid from international donors, and — as one of the most realistic options at the current stage — through a VAT increase. The Cabinet of Ministers has already discussed possible funding options with the Ministry of Finance, international financial organizations, and the relevant committees of the Verkhovna Rada. Kravchenko explained that three key criteria were taken into account when choosing a funding source: the scale of the mobilizable resource, the specifics of administration, and the speed of filling the fund. ### Why VAT: arguments and caveats "Today, this is the only solution that allows us to quickly mobilize the minimum necessary funds so that Ukrainian businesses can withstand the enemy's intense shelling this winter," Kravchenko stated. The minister emphasized that the VAT increase is being considered precisely from the standpoint of the ability to swiftly obtain a significant volume of funds. At the same time, the Cabinet of Ministers stresses that no final decision on raising the VAT rate had been made at the time of the minister's statement. This is one of the options still under discussion. Thus, the phrase "the only solution" in the context of Kravchenko's remarks refers to the speed of mobilizing funds, not to a final political choice. ### The scale of losses: $10 billion in 2026 Previously, Oleksandr Kravchenko stated that the cumulative losses of Ukrainian businesses due to Russian attacks in 2026 could reach $10 billion. It is precisely this scale of losses that determines the need to create a specialized insurance mechanism. The Cabinet of Ministers plans to expand existing programs supporting entrepreneurs and to develop a mechanism for insuring against military risks, which will allow businesses to receive compensation for destroyed infrastructure, lost equipment, and disrupted supply chains amid ongoing shelling. ### Contradictory data The provided sources contain a number of inconsistencies worth noting. First, the headline of the RBC-Ukraine publication contains a grammatical error: "aid to businesses attacking the RF" instead of the correct "attacked by the RF," which formally changes the meaning of the headline, even though the article's text clearly refers to the attacking side — Russia. Second, there is a gap between the stated need for the fund's initial capital ($2–3 billion) and the estimate of annual business losses (up to $10 billion). The minister did not clarify how exactly the fund would cover the difference between the initial capital and the actual losses, nor did he specify whether the VAT rate would be reviewed after the fund's initial funding. Third, Kravchenko calls the VAT increase "the only solution" for quickly mobilizing funds, while simultaneously acknowledging that no final decision has been made and that alternative sources are being discussed — which creates an internal contradiction in his wording. ### What next: prospects and timelines At this point, the VAT increase remains at the stage of consideration in the Cabinet of Ministers. To reach a final decision, coordination with the Ministry of Finance, international financial organizations, and the relevant committees of the Verkhovna Rada is required. Given that Kravchenko emphasizes the winter period as critical for business survival under shelling, the discussion is likely to be accelerated in the coming weeks. However, as of the time of publication, none of the parties — neither the Cabinet, nor the Ministry of Finance, nor the parliamentary committees — has confirmed specific timelines for submitting the relevant bill or resolution. ## 🔍 Fact-Check Verification - [Cabinet of Ministers allows for tax increases to aid businesses attacked by the RF](https://www.rbc.ua/ukr/news/kabmini-dopuskayut-pidvishchennya-podatkiv-1789214529.html) - Заявления министра Кравченко подтверждены. Повышение НДС не принято, а находится на стадии рассмотрения. В заголовке источника допущена грамматическая ошибка (атакующему вместо атакуемому). Конкретные цифры ($2–3 млрд, $10 млрд) приведены со слов министра без независимой верификации. ## ❓ FAQ ### Q: Has a decision on raising VAT in Ukraine already been made? **A:** No. According to Minister Kravchenko, the VAT increase is being considered as one of the options for funding the insurance fund. The Cabinet of Ministers has not made a final decision; discussions are ongoing with the Ministry of Finance and the relevant committees of the Verkhovna Rada. ### Q: How much funding is needed to launch the insurance fund? **A:** By Oleksandr Kravchenko's estimate, launching the compensation mechanism requires an initial capital of no less than $2–3 billion. The fund is planned to be funded from state resources, aid from international donors, and possibly through a VAT increase. ### Q: What are the estimates of Ukrainian business losses in 2026? **A:** The Economy Minister stated that the cumulative losses of businesses due to Russian attacks in 2026 could reach $10 billion. It is precisely this scale that determines the need to create a specialized insurance mechanism. ### Q: Why is VAT being considered as a funding source? **A:** Kravchenko explained that the scale of the resource, the specifics of administration, and the speed of funding were taken into account when choosing a source. VAT allows a significant volume of funds to be mobilized quickly, which is critically important for the winter period of intense shelling.