On September 10, 2025, a conference entitled “De-shadowing of Retail Trade and Services: The Most Vulnerable Sectors” was held in Kyiv, organized by the Ukrainian Business Council in cooperation with ACC, EBA, and its analytical partner, the Economic Expert Platform. Participants analyzed the state of shadow markets in key sectors of Ukraine’s economy and discussed specific measures to combat shadowing. Members of parliament, representatives of law enforcement agencies, the judiciary, and the business community took part in the discussion.

Danylo Getmantsev, Chairman of the Verkhovna Rada Committee on Finance, Tax and Customs Policy, thanked the UBA for its consistent support for de-shadowing and noted a radical change in public opinion on this issue.

“Together, we have managed to change public opinion and explain to people what de-shadowing is and why it is necessary,” he emphasized.

Getmantsev stressed that today all associations support the course of de-shadowing and leveling competition, which is the result of an ideological victory.

Yaroslav Zheleznyak, First Deputy Chairman of the Committee on Finance, Tax and Customs Policy, greeted those present and noted the successful start of the BEB’s reboot thanks to the support of the URB. He emphasized the relevance of the topic, mentioning the significant share of illegal tobacco, alcohol, and problems with new iPhones in the illegal trade.

Oleksandr Tsivinsky, Director of the Economic Security Bureau of Ukraine, noted the importance of obtaining information from industry experts and the need to create a level playing field for all business representatives. He emphasized the BEB’s readiness to implement ideas that will bring the country closer to fair competition.

Myroslav Laba, an expert at the Economic Expert Platform, presented a detailed analysis of the excise goods market, which includes tobacco, fuel, and alcohol. According to him, positive changes took place in the second quarter of 2025: the shadow economy in the alcohol market decreased from 31% to 15%, in the tobacco industry – by 3%, and in the fuel market as a whole over three years – the shadow economy fell from 34% to 19%. He noted that budget losses from the shadow market for excise goods had fallen from 50 to 35-40 billion hryvnia per year, but this was still too much. Myroslav also presented an analysis of the tax burden on gas stations, revealing significant anomalies: taxes paid per liter of fuel range from 50 kopecks to 4 hryvnia per liter, with salaries ranging from 8 to 40 thousand hryvnia per month. There have been few positive developments in the electronics and electrical engineering market—trade without issuing fiscal receipts (and therefore without paying VAT) has become widespread, and there is a large difference in the average taxes on labor in different chains.

Danylo Getmantsev noted that significantly lower official salaries compared to the industry average should be an unconditional criterion for the State Tax Service to classify a company as risky.

Yuriy Peroganych, head of the Association of Information Technology Enterprises of Ukraine, began his speech with an anecdote:

“Man, you have bananas in your ears!
“I can’t hear you, I have bananas in my ears!

Today, businesses are turning to the state with their problems, but some government agencies are like the man in this joke, who knows everything himself but, unfortunately, does nothing.

He presented more than a dozen fictitious checks from various chains and cities in Ukraine, which the association will send to the State Tax Service in an official letter.

Igor Khizhnyak, CEO of COMFY, drew attention to the importance of ensuring equal opportunities for doing business and the significant differences in the tax burden on different retail chains.

“A year ago, I raised the issue of the gray market for technology and electronics during the launch of the 16th iPhone. Today, the score is 160-0, which is how many Yabko stores continue to operate throughout Ukraine. But we are not losing hope,” he concluded.

Anton Odaryuk, a representative of COMFY, revealed in detail the scale of problems in the technology market, particularly Apple smartphones. According to the company’s analysts, 78% of iPhones in Ukraine are sold through gray channels, which leads to losses for the state of 12 billion hryvnia per year in VAT alone. He demonstrated specific examples of violations: the YABLUKA chain uses counterfeit fiscal receipts with the same fiscal number for cash registers throughout Ukraine, while each cash register should have a unique number. Odaruk also pointed out that, according to official reports, only 40 people are officially employed at 160 retail outlets in the Yabko chain. At the same time, COMFY, which operates 112 stores of the same name, employs 4,700 people. He also presented the results of test purchases in the Yabko and Yabluka chains and raised the issue of the need to strengthen control over the level of fiscalization of sales in these chains.

Natalia Petrivska, head of the Ukrainian Food Retail Alliance, presented the position of the retail chains that are members of the Union, which together paid about 30 billion hryvnia in taxes in 2024. The average salary at each of the enterprises exceeds 20,000 hryvnia. She highlighted the problem of fragmentation of large retail chains by registering stores or cash registers as sole proprietorships, unofficially registering employees, or paying unofficial salaries, which creates unequal conditions of competition and leads to tax revenue shortfalls.

Yefrem Lashchuk, an expert at the Economic Expert Platform, analyzed the legal aspects of Internet providers’ participation in the simplified taxation system. He noted that, according to the Tax Code, those who provide technical maintenance services for telecommunications networks cannot be single tax payers. The provision of Internet services is impossible without parallel technical maintenance of networks.

Iryna Ogorodnikova, a representative of the Association of Tax Consultants, presented the results of a study of court practice in 2024 regarding Internet providers. Of the 22 cases in the first instance, 14 were decided in favor of taxpayers, in the second instance – 13 out of 12, and in the third – all 4 cases. The main reason for the cancellation of the State Tax Service’s decisions was procedural violations, in particular, conducting desk audits instead of documentary ones.

Mykola Yakovenko, a judge of the Supreme Court within the Administrative Court of Cassation, explained the difficulties of considering cases concerning the taxation of electronic communications service providers under the simplified taxation system and the problems of applying the provisions of paragraph 8 of subparagraph 291.5.1 of paragraph 291.5 of Article 291 of the Tax Code of Ukraine.

A certain number of decisions of the tax authority are recognized as unlawful and are overturned by the courts due to procedural violations in their adoption.

He also reported that many cases in this category, in particular cases of minor complexity, are considered by courts under the rules of simplified proceedings, a significant number of which do not reach cassation, as a court that would have the opportunity to form legal conclusions regarding the decisions made by the tax authority on the specified disputed issues.

Mykola Yakovenko suggested that, if necessary, a motion should be filed with the courts to switch to general proceedings so that the parties would have the opportunity to appeal the court decisions and form high-quality judicial practice.

Dmytro Mykhailenko, head of the CCI Tax Committee, critically assessed the work of the tax service, comparing it to the actions of a detective who “gathered evidence in such a way that the case fell apart in court.” He noted that out of 300 appeals for the cancellation of single tax payer status, 250 were lost on formal grounds.

Artem Freuk, representative of Kyivstar, shared the positive results of state policy regarding Internet providers. According to him, one of the top five shredders switched from one hundred sole proprietorships to five or six limited liability companies operating under the general taxation system. He also noted the problem with statistics: “427 sole proprietors without a single employee provided services worth 2.5 billion hryvnia,” which means an average of 3,000 subscribers per sole proprietor.

Tetyana Koschuk, a taxation expert at the Growford Institute, presented a comprehensive study of the illegal cigarette market. It estimates that one ton of raw tobacco can be used to produce illegal products worth 5.6 million hryvnia, and an illegal production line can pay for itself in 10 days. In one month of illegal production, it is entirely possible to cover all costs, including corruption, associated with its organization. Koshchuk also noted the partial replacement of “gray” factories with “black” production lines and the emergence of a new product on the market—filterless cigarettes and packs for 25 hryvnia. The high profitability of such illegal activities requires constant attention from regulatory and law enforcement agencies.

Yefrem Lashchuk, an expert at the Economic Expert Platform, presented the conclusions of an analysis of global experience, according to which the optimal solution is legislative regulation of the industry, in particular, defining the concept of a nicotine booster and focusing taxation specifically on nicotine-containing liquids.

Andriy Solomin, representative of the NORT association, welcomed the fact that the regulation of the electronic cigarette market is being publicly discussed for the first time. He stressed the importance of separating the white and black markets and expressed hope for the development of effective tools to combat illegal trade.

In his subsequent speeches, Danylo Getmantsev emphasized the need for systematic work instead of just looking for quick legislative solutions.

“The issue is definitely not about legislative regulation. The issue is about systematic work, primarily by the State Tax Service and the State Bureau of Investigation,” he stressed.

D. Getmantsev also noted the importance of an active position on the part of the white market and cited the example of a Khmelnytsky operator with 117 individual entrepreneurs as a representative case of fragmentation.

Oleksandr Tsivinsky confirmed that the BEB is already paying attention to the analytical indicators presented when determining areas of activity. He noted the start of the process of rebooting the BEB and the need to concentrate resources on the most difficult areas. Tsivinsky also stressed the importance of equal conditions for BEB employees: “An employee who earns 60% less than his colleague in other law enforcement agencies cannot work fully effectively.”

Andriy Lukashevich, representative of Philip Morris Ukraine, pointed out that in order for the BEB to properly perform its tasks, it is necessary to provide an adequate level of funding to ensure decent salaries for BEB employees and to open new regional offices.

Yaroslav Zheleznyak responded to a request to increase the BEB budget, noting the complexity of this issue during martial law, but expressed his willingness to help if supported by the business community: “If there are official requests from the business community, we will have something to rely on.”

The conference demonstrated the scale of shadow economy problems in key sectors of Ukraine and the need for a comprehensive approach to solving them. Participants reached a consensus on the importance of systematic work by law enforcement agencies, adequate funding for the BEB, and an active position by legitimate businesses in combating unfair competition.

Participants plan to continue working in this direction, jointly develop the necessary amendments to regulatory acts, and regularly hold thematic meetings of committees to monitor the situation in problem sectors.