A scheme involving 3,500 sole proprietorships has been uncovered; over 386 million hryvnias in taxes were underpaid
The Office of the Prosecutor General, in collaboration with the Bureau of Economic Security (BEB), has uncovered a large-scale tax evasion scheme that had been operated for several years by a group of companies engaged in the sale of consumer goods across various regions of Ukraine.
According to the investigation, instead of a single business entity, approximately 3,500 sole proprietorships were involved, allowing the group to evade paying significant amounts of taxes—estimated at over 386 million hryvnias.
This was reported by the Office of the Prosecutor General.
The essence of the scheme lay in “fragmenting” the business: instead of a single large company, it was formally divided into thousands of sole proprietorships to minimize taxes.
According to the investigation, over 3,500 entrepreneurs were involved in the scheme between 2022 and 2024. Some were store employees registered as sole proprietors, while others were straw persons from socially vulnerable groups, in whose names businesses and accounts were registered.
In fact, they all operated as a single, centrally managed network: the organizers controlled turnover to ensure it did not exceed the limits of the simplified tax system. By 2023, this network was already among the top 10 grocery retailers in Ukraine by number of stores.
According to preliminary estimates, income tax was underreported by over 386 million UAH.
Dozens of people were involved in the scheme, registering sole proprietorships, maintaining “shadow” accounting, and coordinating the network’s operations.
During searches, documents, bank cards, equipment, rough notes, and unaccounted-for cash were seized. The investigation is ongoing.
Over 800,000 Ukrainianswork for sole proprietorships.
Individual entrepreneurs must pay all taxes by March 20: details.
Individual entrepreneurs who losttheir businesses due to the war can apply for compensation.
Small businesses in Ukraine are facing serious difficulties due to frequent Russian strikes on energy infrastructure, causing prolonged outages of electricity, water, and heat during the winter season at temperatures of −20 °C.
