The issue of delayed VAT refunds remains unresolved

The state’s VAT refund debt has stabilized at UAH 29-31 billion since April, but the problem has remained unresolved for six months. Delayed tax refunds deprive businesses of working capital and force them to cut production. Experts are confident that the state has the financial resources to pay off the debt, but the prospects for payments remain unclear amid the deteriorating economic situation in the country.

The situation with VAT refunds

According to the State Tax Service of Ukraine, the volume of VAT refunds for January-August 2025 increased by 21.2%, or UAH 20.3 billion, to UAH 116.2 billion. At the same time, the amount claimed for refunds increased by 22.5%, or UAH 23.1 billion, reaching UAH 125.4 billion.

The situation with VAT refund arrears remains difficult. From January to April of this year, the debt grew by UAH 7.1 billion, reaching UAH 30.4 billion. In April alone, this figure increased by almost UAH 4 billion. As of now, the indicator has stabilized, fluctuating in the range of UAH 29-31 billion. The situation with tax non-refunds has not worsened in recent months, but it has not improved either.

“We have not received any complaints from businesses, and this issue has not been raised at working meetings with the State Tax Service of Ukraine for some time,” the Ukrainian Union of Industrialists and Entrepreneurs told GMK Center in a comment.

The issue of VAT non-refunds, totaling hundreds of millions of hryvnias, has hit several mining and steel companies, including Ferrexpo, Centravis, and Kryvyi Rih Iron Ore Plant. As a result, these companies have been deprived of working capital and forced to reduce production or even cease operations altogether.

Unfortunately, it is currently impossible to access the register of VAT recipients. Before the war, it was open and posted on the Ministry of Finance website. However, in 2022 it was restricted, along with many other state registers, for security reasons.

Financial resources

Experts believe that the state has the necessary financial resources to refund VAT in a timely manner.

«I think the state has the funds to pay off this debt. The real issue lies in repeated overestimations of VAT revenues in the budget planning process. For years, projected VAT revenues have been set at around 10.5% of GDP, while actual collections rarely exceed 9.5%, sometimes even falling below that level. As a result, VAT collection shortfalls this year will amount to UAH 80+ billion. In this context, withholding VAT refunds has become a standard tactic – even though sufficient funds are available, mainly due to better-than-expected payroll tax revenues and surplus Western aid,» explained economic expert Daniil Monin in a comment to GMK Center.

The economic situation in the country has deteriorated significantly in recent months, so the prospects for the state to find funds to pay off its debts look doubtful. According to the Ministry of Finance’s estimates, although more than $30.6 billion in external financing has already been attracted in 2025, the state budget still lacks $8.7 billion this year. According to the same data, the shortfall for next year is $10 billion. The NBU’s estimate is $12.7 billion.

Without receiving VAT refunds, large and medium-sized Ukrainian businesses, especially exporters, are effectively deprived of part of their working capital. Add this problem to others — losses from military operations, high prices and tariffs for energy and logistics, staff shortages, and lack of affordable financing — and you get an explosive mixture that can weaken any Ukrainian business, even the most stable ones.