The debt pit of small business: Individual entrepreneurs owe the state more than UAH 13 billion
11 June 16:40
INFOGRAPHICS
As of May 2025 , 1.29 million Ukrainian entrepreneurs have tax debts of more than UAH 13 billion. This is twice as much as before Russia’s full-scale invasion of Ukraine. These data are provided by the State Tax Service in response to a request from the company Opendatabot, "Komersant Ukrainian" reports.
Over the past three years, the number of individual entrepreneurs in debt has increased from 670, 000 in February 2022 to 1.29 million in May 2025. The sharpest jump in debt was recorded by monitors in March 2022, immediately after the start of a full-scale war. In just one month, 213 thousand entrepreneurs were added to the list of debtors. This is almost a third of the total increase in debts over the entire period of the war.
In the first year of the invasion, the number of debtors increased by 1.6 times. In particular, in March 2022, the tax authorities recorded a 31% increase compared to the previous month, a record monthly figure for the entire period. This is primarily due to the suspension of business activities, forced evacuation and loss of assets.
In 2023, the growth rate of tax debt slowed down. The number of new debtors grew by only 4% over the year, which economic experts attribute to the partial adaptation of small businesses to the war situation, the transition to an online work model, and the return of some entrepreneurs to active work.
However, in 2024, the situation deteriorated again. The number of new debtors increased by 16% during the year . The main factors in the tax service are:
- a decline in consumer demand
- inflationary pressure;
- high logistics costs;
- frequent power outages, which again put microbusinesses in a difficult position.
In 2025, the dynamics of debt, albeit to a lesser extent, will remain consistently negative. In January, more than 42 thousand entrepreneurs became new debtors (a 3.3% increase in the number of debtors compared to December 2024). However, over the following months, some entrepreneurs were able to partially repay their debts. Therefore, by early May, the growth rate slowed to 2% (or 24,275 new debtors).
The situation with entrepreneurs serving in the Armed Forces deserves special attention. According to official data, as of April 2025, 3, 145 mobilized sole proprietors have debts on single tax and military duty. The total amount of such debts is UAH 30 million. At the same time, analysts emphasize that the actual number of such debtors may be much higher, as accounting is complicated and data is fragmented.
It is worth noting that since the beginning of the full-scale invasion of Ukraine by the Russian Armed Forces, the Tax Service has closed access to public information on tax arrears of entrepreneurs, citing the criticality of this data in the context of martial law. This makes independent audits and public monitoring impossible, which has drawn criticism from the business community and the expert community.
Read also: Sole proprietors at the front, debts in the rear: the state is looking for a way out
However, according to experts in the field of economics and tax law, the current situation with the debts of individual entrepreneurs to the state creates additional risks for both the budget of Ukraine and the tax system itself. On the one hand, tax revenues are declining. On the other hand, the accumulation of debts without clear restructuring or amnesty mechanisms increases the pressure on micro-entrepreneurs, who often do not have the resources to restore their businesses. All of this is happening against the backdrop of the government’s growing need to finance the security sector and social programs.
Financial analysts are calling on the Cabinet of Ministers to consider introducing a targeted program to support debtors. In particular, writing off fines for mobilized entrepreneurs and introducing preferential restructuring for small players.According to experts, if this problem is ignored, there is a risk of even greater curtailment of small businesses, which in the long run will weaken the economic recovery after the war.
The current situation with tax debts of entrepreneurs is another indicator of the deep burden on small businesses in a war economy. Without a systematic response from the government, this trend may have long-term negative consequences for the country’s economic stability.
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