--- title: "Ukrainian Cabinet Seeks VAT Hike Alternative to Launch War Risks Insurance Fund" description: "Prime Minister Koretskyi stated that there is no consensus in parliament to raise VAT from 20% to 21%, so the Cabinet is looking for alternative funding sources for the war risks insurance fund." date: 2026-10-26T18:26:07.451Z lang: en url: https://xab.info/en/posts/ukrainian-cabinet-seeks-vat-alternative tags: [ukraine, vat, war-risk-insurance, budget, economy] author: "Darya Fomina" publisher: "XAB.info" --- # Ukrainian Cabinet Seeks VAT Hike Alternative to Launch War Risks Insurance Fund ![Majestic building of the Ukrainian government illuminated in national flag colors at night](https://xab.info/media/2026/10/26/kabmin-isket-alternativu-nds-dlya-fonda-strahovaniya/kabmin-isket-alternativu-nds-dlya-fonda-strahovaniya-1.webp) ## Key Points - There is no consensus in parliament or business on raising VAT from 20% to 21%, so the Cabinet is looking for other funding mechanisms. - Ukraine must contribute $1 billion to the war risks insurance fund, after which partners promise to add $3 billion. - The Ministry of Economy and Ministry of Finance are working on alternative sources; the fund is planned to launch in early 2027. - In September 2026, the war risks insurance program was expanded to Kyiv and the Kyiv region, with the limit increased to 5 million hryvnias. The Cabinet of Ministers of Ukraine has acknowledged that parliament may lack the votes to raise the current VAT rate from 20% to 21%, prompting the government to explore alternative funding sources to launch the war risks insurance fund. This was stated by Prime Minister Serhii Koretskyi during the 12th Kyiv International Economic Forum, who emphasized that consensus on increasing the tax by 1 percentage point has not yet been reached among large and medium-sized businesses or in the Verkhovna Rada. ### No Consensus on VAT Increase “So far, we have not found support for raising VAT by 1%. There is no consensus among large and medium-sized businesses, and no support in parliament yet. We are looking for other mechanisms,” Koretskyi said. According to him, the government will monitor the budgetary process in parliament, particularly the adoption of the state budget for 2026, and will proceed based on its results. At the same time, the prime minister emphasized that the state has no other way: “we must find the instrument, together we will see what we can contribute from.” ### Mechanism for Multiplying International Partners' Contributions To establish an effective war risks insurance fund capable of covering large business projects, Ukraine must make its own contribution of $1 billion. Only after that, as the prime minister explained, do international partners promise to add another $3 billion to the fund. Koretskyi stressed that the Ukrainian side must take the first step, while partners will merely increase—effectively multiplying—the state's contribution. ### Alternative Capital Sources and Launch Timeline Minister of Economy Oleksandr Kravchenko stated that his ministry, together with the Ministry of Finance, is working on other options for capital sources in the amount of $1 billion. “I wouldn't want to go into specifics, but we are preparing in case there is no VAT [increase],” he said, refusing to detail possible alternatives. The government expects to launch the insurance fund starting in early 2027. ### Context: Current State of War Risks Insurance As RBC-Ukraine notes, war risks insurance currently has limited coverage limits and remains quite expensive: local insurance companies are capable of covering limits of 10–20 million hryvnias, while the participation of international insurance companies allows this amount to be increased. Previously, it was specifically to finance the fund that the government proposed raising VAT by 1%—from 20% to 21%, which requires legislative changes, particularly to the Tax Code; the Cabinet has already included the relevant provision in the draft State Budget for 2027. Recall that in September 2026, the Cabinet expanded the existing state war risks insurance program covering the needs of small and medium-sized businesses: it was extended to Kyiv and the Kyiv region, and the maximum insurance limit was increased from 3 to 5 million hryvnias. Thus, the search for alternative financing becomes a key condition for scaling the program to big business in 2027. ## Fact-Check & Sources - [Другого пути нет: Кабмин ищет альтернативу повышению НДС, чтобы запустить фонд страхования](https://www.rbc.ua/ukr/news/inshogo-shlyahu-nemae-kabmin-shukae-alternativu-1793025994.html) - Statements by Prime Minister Koretskyi and Minister of Economy Kravchenko at the 12th Kyiv International Economic Forum; contribution figures ($1 billion + $3 billion), VAT rates (20→21%), insurance limits (10–20 million UAH locally, 3→5 million UAH under the state program), and launch timelines (early 2027) are provided in the source text. ## FAQ ### Why is the government abandoning the VAT increase? According to the prime minister, there is no consensus in parliament and among large and medium-sized businesses to raise VAT by 1%, so the Cabinet is looking for other funding mechanisms. ### How much must Ukraine contribute to the war risks insurance fund? Ukraine must contribute $1 billion; after that, international partners promise to add another $3 billion. ### When is the fund scheduled to launch? The government hopes to launch the insurance fund at the beginning of 2027. ### What changed in the state war risks insurance program in September 2026? The program for small and medium-sized businesses was expanded to Kyiv and the Kyiv region, and the maximum insurance limit was increased from 3 to 5 million hryvnias.