Fifty sole proprietorships linked to a single chain: a tax evasion scheme in the food retail sector has been uncovered in Zakarpattia
20 January 16:23
In Zakarpattia, law enforcement officials have uncovered a large-scale tax evasion scheme in the food retail sector. According to the investigation, the business was artificially split into dozens of individual entrepreneurs, which allowed them to reduce their tax liabilities by tens of millions of hryvnias.
This was reported by the Office of the Prosecutor General, as reported by "Komersant Ukrainian".
According to investigators, the management of a company selling everyday consumer goods distributed its operations among controlled sole proprietorships operating under the simplified tax system.
In more than 50 stores in the chain between 2023 and 2025, sales of non-excise goods were conducted using the details of nearly 50 sole proprietors. Most of them are relatives of the company’s founders or its employees.
Formally, the stores operated under three different brands, but according to the prosecutor’s office, actual control over finances, inventory, and personnel remained with the company’s officials.
How much money did the state lose
The total value of goods sold through this scheme exceeded 100 million hryvnias. According to investigators’ estimates, this resulted in the evasion of over 25 million hryvnias in income tax and VAT.
To make the schemes appear legitimate, the organizers entered into fictitious franchise agreements with controlled sole proprietorships and registered a lawyer’s office at the company’s premises.
Two founders of the company, one of whom is the director, were notified of the charges. The accountant and the company’s executive director, who also holds the status of a lawyer, have also been implicated in the case.
They are charged with intentional tax evasion on an especially large scale, committed by an organized group.
What the investigation has already achieved
During the pre-trial investigation, law enforcement officials seized electronic digital signatures, bank cards, seals of sole proprietorships, financial documentation, and powers of attorney, which, according to the investigation, confirm the company’s actual control over the entrepreneurs.
The prosecutor’s office reports that over 25 million UAH in unpaid taxes has already been fully reimbursed to the state budget, and the use of controlled sole proprietorships in the chain of stores has been halted.
The investigation is being conducted by detectives from the Economic Security Bureau in Zakarpattia Oblast. At the same time, the prosecutor’s office emphasizes that, in accordance with the Constitution, all individuals involved in the case are presumed innocent until proven guilty by a court.
Schemes involving the fragmentation of businesses through sole proprietorships have been a focus of attention for law enforcement and tax authorities for several years now.
Danylo Getmantsev, chairman of the Verkhovna Rada’s Tax Committee, previously stated that the increase in the number of sole proprietorships in Ukraine is often linked not to economic development, but to the use of a simplified system for tax evasion by large and medium-sized businesses.
