Ukraine: Guidance on VAT exemption for defense goods

Goods must fall within specific defense categories listed in Tax Code

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May 7, 2025

The State Tax Service (STS) in February 2025 clarified that under section XX, subsection 2, paragraph 32(4) of the Tax Code, the supply of defense goods within Ukraine is exempt from value added tax (VAT) if the following conditions are met:

  • Goods fall within specific defense categories listed in the Tax Code
  • Supply is part of a state contract
  • Supplier is either the executor or co-executor of such a contract
  • Buyer is a governmental institution

In addition, if an executor or co-executor purchased goods or services inclusive of VAT for VAT-exempt transactions, no extra VAT obligations are incurred.


For further information, contact a KPMG tax professional in Ukraine:

Oksana Olekhova | oolekhova@kpmg.ua

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