On 5 October 2026, the Cabinet of Ministers adopted Resolution No. 1187, expanding the list of goods eligible for VAT exemption (0% rate) and customs duty relief when imported or supplied for defense needs. The amendment, effective from 1 November 2026, adds 47 new HS code positions covering electronic components, specialized software, protective materials, and unmanned aerial vehicle parts. The measure operates under Article 196.1 of the Tax Code and the Law on Stimulating Defense Industry (No. 4012-IX). Eligible entities must be registered in the Unified State Register of Defense Enterprises and obtain a confirmation certificate from the Ministry of Strategic Industries. The STS will verify eligibility through automated cross-referencing with the defense registry. The exemption applies to both imports and domestic supplies, provided the goods are used exclusively for defense production or maintenance.
Key Takeaways
- Broadened Coverage: The expanded list includes dual-use goods previously subject to standard 20% VAT, reducing cash-flow pressure on defense contractors.
- Streamlined Verification: Electronic certificates replace paper-based approvals; the STS electronic cabinet will display real-time eligibility status for each transaction.
- Anti-Abuse Safeguards: Misuse of the exemption triggers a 200% penalty of the evaded tax plus potential criminal liability under Article 212 of the Criminal Code.
Disclaimer: This article is compiled and summarized by the AI based on publicly available information and is for general information purposes only. It does not constitute any form of formal tax advice, legal opinion, or basis for performance. Please consult a qualified professional tax advisor or legal counsel for tax advice.
Source: Read Official Announcement