The price of the medicines in Ukraine will be raised by 80%

The price of the medicines in Ukraine will be raised by 80%

Today patients, pharmacists and suppliers of medical equipment made joint allegations against the Ministry of Income and Charges of Ukraine, regarding illegal raise of VAT on drugs from 7% to 20%.

Оn April 4, Friday night, Ministry of Income and Charges has sent the clarification letter to all customs departments in Ukraine No. 7822/7/99-99-19-05-01-17 . Аccording to the last paragraph, «…taxation of indicated category of products, when entering the territory of Ukraine, is conducted under the regular conditions at the rate of 20 percent..», but not at the rate of 7% as it was previously envisaged by the Law about Prevention of Financial Disaster and Creation of Preconditions of Economic Growth in Ukraine No. 1166-VII dated 27 March, 2014.

«On Friday, while my company was passing customs clearance of goods of medical use, Lviv customs had informed us that, they will proceed with customs clearance only at the rate 20% VAT, — tells Oleh Matseh, the owner of the company, engaged in the supply of medical equipment. — We were deeply surprised, as previously the matter was to introduce the VAT at the rate of 7% for medical equipment, that would hit really hard the pockets of Ukrainians, but not 20%, that will simply kill the market. Such raise was argued with explanatory letters from the Ministry, which states that VAT should be at a rate of 20%, including medicines and medical equipment. I would like to stress that before this letter the goods passed the customs clearance at the rate of 7% VAT. This could be checked in custom’s database».

It is worth noting, that according to the Ukrainian legislature, the right to set the tax rates, repeal or modify them has only the body of state legislature that is the Parliament of Ukraine.

«Such VAT raise is an example of manual regulation of state’s economy, — states Eugen Rzyvodernikov, Deputy Director of SMD company. — The worst fact is, that this regulation will lead to significant increase in prices for medicines, that are already growing due to the depreciation of the state’s currency. In the country, were only 11% of the drugs, in monetary value, are procured by state budget, the consumer will suffer the most, who pays for treatment on his own and who is not receiving any compensation from the state. VAT will, without doubts, lead to great reduce in availability of the drugs for a large number of Ukrainian citizens.»

In experts view, in case of the VAT rate is increased to 20%, the price on drugs and medical equipment will be raised by 80%, minding the rate of inflation.

«This year the half of the Ukrainians with fatal diseases were already doomed to die, — says Dmytro Sherembei, the Chairman of the Board of Charitable Foundation Patients of Ukraine (UCAB). — We already had faced the problem of huge underfunding of drug procurement by the Ministry of Health of Ukraine for fatally ill Ukrainians, with cancer, tuberculosis, AIDS and others. But this step will be the last nail to the coffin. Raising any rates or introducing additional 7% or 20% VAT — is proportional to the number of people’s lives that will not receive the medicines, due to its high price. When raising the VAT to 20%, every fifth Ukrainian will not receive the drugs and thus will die».

We would like to remind you, that starting from April 1st an additional tax (VAT) was set on all drugs and medical equipment at the rate of 7%, according to the Law about Prevention of Financial Disaster and Creation of Preconditions of Economic Growth in Ukraine. Such VAT would lead to additional 10-15% rise in prices.

Contact person:
Oleksandra Ustinova
067 550 15 70

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