(KYIV, UKRAINE) – Ukraine’s State Tax Service has identified more than 500 brands and trademarks showing signs of artificial business splitting since the start of 2026. Preliminary estimates indicate potential state budget losses of at least 1.7 billion Ukrainian hryvnia, equivalent to roughly 40.8 million US dollars or 31.9 million British pounds, from tax avoidance.
The tax service press office reported that analytical work has uncovered 23 large retail chains that involved over one thousand individual entrepreneurs in such schemes. All materials have been handed over to law enforcement agencies and pretrial investigations are under way.
The head of the State Tax Service, Lesia Karnaukh, said the work is continuing. Specialists are now examining possible use of business splitting schemes at a further 18 large retail chains. These include businesses selling clothing, footwear, electronics, watches, cosmetics, household chemicals and public catering establishments.
Karnaukh made clear that cooperation between a company and individual entrepreneurs is not a violation in itself. However, when dozens of entrepreneurs operate only formally as separate business entities while in practice working as a single company, under a shared brand, in the same shops, with common employees, warehouses and management, this becomes a question not of business model but of tax honesty.
Karnaukh added that the rules must be the same for everyone, a position she said is shared by businesses that operate in good faith. When some pay taxes honestly and others invent schemes, conditions of competition become unequal, she said.
Separately, the Territorial Office of the Bureau of Economic Security in the Odesa region exposed a businessman who sold flowers through a network of shops in Odesa and Kyiv and organised a tax avoidance scheme by splitting the business. He involved over 60 people, with proceeds from product sales flowing to accounts of more than 30 controlled individual entrepreneurs.
As a result, over 10 million hryvnia in taxes did not reach the state budget, an amount equal to about 240,000 US dollars or 188,000 British pounds. During the pretrial investigation, the businessman fully reimbursed the losses caused to the state.