Ukraine's arms industry wants the government to scrap a steep fee on weapons exports, warning it undercuts their prices just as Europe's defense market opens, RBC-Ukraine reported. The same fee has opened a second fight in Kyiv, where parliament this week declined to turn its revenue into money for the army.

Russia's war on Ukraine has pushed Europe into rearming, and Ukraine's battle-tested arms makers are among the few that can deliver at scale right now—an opening that domestic red tape could blunt, handing the advantage to competitors just as the market grows.

A €60 billion European window—and a fee in the way

The push comes as Europe opens a major market for Ukrainian weapons. The EU's €90 billion Ukraine Support Loan for 2026-2027 reserves €60 billion for defense purchases, and partners increasingly want weapons built on their own soil. International partners report more than 200 cooperation approaches to Ukrainian firms still without a decision, according to the industry's press release. Producers link the fee fix to Build with Ukraine, a co-production push they consider strategically significant.

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Parliament won't route the money to the army

On 15 September, the Verkhovna Rada—Ukraine's parliament—rejected a bill in first reading that would have sent fee revenue collected from 1 August 2026 into a special budget fund for the Defense Ministry, half for buying, modernizing, and repairing weapons, half for soldiers' pay. The vote left the fee itself untouched, since it rests on the Cabinet resolution, and settled only that its revenue will not be earmarked for the army.

The fee producers want gone

The Ukrainian Council of Arms Manufacturers, joined by other defense and employer groups, prepared proposals to rework the July government resolution, No. 875. They want the fee—20% on finished goods and technologies, 30% on parts—cut to zero, or capped at 5%. Firms must also pay upfront, before any foreign payment lands, with no refund guaranteed if a deal collapses. A UAH 15 million (about $337,000) threshold shuts out the small test shipments new clients often begin with.

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The fee has drawn complaints since the resolution took effect in early July. Ihor Fedirko, the council's executive director, earlier said the 30-day review window was welcome but warned it could clog into a bureaucratic queue as staff leave the agencies running it. One of the associations behind the submission calls the 30% rate on parts prohibitive, since Europe is where Ukrainian firms would undercut Chinese suppliers on price.

Ukraine has swung from banning weapons sales abroad to courting foreign buyers, and its defense sector now ranks among the country's fastest-growing industries. Wartime certification to NATO standards is turning that output into something European militaries can actually buy.

Ukraine's largest arms-industry group says it is backing the country's drive to sell and co-produce weapons abroad, while pressing the government to fix two separate obstacles in its way. The Council of Defense Industry, which represents more than 400 companies, wants a costly new export-permit fee and a stalled joint-production program to be upgraded, it said on Facebook.

The two problems are distinct. Resolution 875, the wartime rules for shipping arms abroad, charges a 20-30 percent fee on export permits, which the industry says prices Ukrainian goods out of the market.

The export fee bites

Resolution 875, adopted in July, was intended to streamline exports, with a 30-day review period and a streamlined path for partner countries. But the fee has choked it: only about 10 small export contracts have been signed since exports began, and not one permit has been issued under the new rules, Militarnyi reports.

"Resolution 875 in its current form contains provisions that could substantially worsen the competitiveness of Ukrainian producers," the group says.

Build with Ukraine is a separate track

The program lets producers export their technology and set up joint production abroad, reaching EU markets, financing, and infrastructure, while partners fund weapons production inside Ukraine.

The program lets producers export their technology and set up joint production abroad, reaching EU markets, financing, and infrastructure, while partners fund weapons production inside Ukraine. Talks are underway with Denmark, Norway, and Germany.

President Zelenskyy has said $43 billion was raised for Ukraine's defense industry in 2025, floated a goal of partner states each spending 0.25 percent of their GDP on it, and stressed that no Ukrainian technology will reach countries tied to Russia.

The Council, whose ecosystem spans more than 360 manufacturers, 28 drone-pilot schools, and 20 defense venture funds, says it is ready to help refine the mechanism.