The number of sole proprietorships is growing in Ukraine, but this does not guarantee economic development
The number of new business registrations is increasing in Ukraine, but this trend alone does not indicate actual economic growth. According to Danil Getmantsev, the statistics do not show how many companies and entrepreneurs are actually operating, creating jobs, and paying taxes.
The mass registration of sole proprietorships may indicate the flexibility of small businesses, but at the same time creates the risk of artificial fragmentation of companies to reduce the tax burden.
According to the State Statistics Service, as of early July 2026, there were over 1.57 million legal entities and 1.84 million sole proprietorships registered in Ukraine.
In the second quarter of 2026, nearly 76,000 new sole proprietorships and 8,900 legal entities were registered. Compared to the first quarter, the number of new sole proprietorships increased by 20%, and that of legal entities by 9%.
Getmantsev noted that at first glance, these figures appear optimistic, as Ukrainians continue to start their own businesses even during the war. However, he said, registration statistics show only the “surface” and do not reveal how many of these entities are actually operating.
One of the key indicators is the large gap between the number of new sole proprietorships and legal entities. For every legal entity established, there are more than eight new sole proprietorships.
According to Getmantsev, this may indicate people’s desire for self-employment and the flexibility of microbusinesses. At the same time, the mass registration of sole proprietorships is often linked to the artificial fragmentation of businesses to minimize taxes.
“Tax optimization under the guise of an ‘army of sole proprietors’ is a challenge to transparent competition,” he noted.
Another important indicator is the sectoral breakdown of new registrations. In the second quarter, more than half of new sole proprietorships and legal entities were concentrated in a group of sectors covering trade, finance, real estate transactions, and technical and administrative services.
Specifically:
53.9% of new sole proprietorships;
51.7% of new legal entities.
In contrast, manufacturing, construction, and the agricultural sector together accounted for only about 7% of new sole proprietorships and 23.3% of new legal entities.
Getmantsev noted that the development of services and trade is important, but the economy needs manufacturing for long-term sustainability.
According to him, the effectiveness of economic policy should not be measured solely by the number of new entries in the registries. It is necessary to assess actual business turnover, the number of salaried jobs created, taxes paid, and the ability of companies to operate not just for one or two years, but for longer.
Only such an approach, according to Getmantsev, will allow for the transformation of quantitative growth in the registries into a qualitative reduction of the shadow economy and a real increase in budget revenue.
This information is based on a statement by Danylo Getmantsev, chairman of the parliamentary committee on finance, tax, and customs policy.
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