Law enforcement authorities in the Lviv region have dismantled a sophisticated tax evasion scheme involving a major electronics and appliance retailer, according to an official report by the Office of the Prosecutor General. The state budget suffered losses exceeding 60 million UAH due to the illicit use of small business tax status.
Investigators found that the company’s director orchestrated a scheme throughout 2025 involving 58 individuals registered as sole proprietors (FOPs). These entities, which operated under a simplified tax system, served as a facade for the company’s retail operations. In reality, these individuals performed no independent business activity; the company’s management controlled all financial flows, accounting, and daily operations. By funneling sales through these entities, the retailer avoided paying the 20% Value Added Tax (VAT).
“Funds from technical equipment sales were not directed to the main company account but were distributed among the accounts of the involved sole proprietors,” the prosecutor’s office stated. This maneuver effectively allowed the business to artificially minimize its tax liabilities. Following the investigation, the company fully compensated the state for the losses, transferring over 60 million UAH back into the national budget. The prosecution has now petitioned the court to release the suspect from criminal liability, citing the full reimbursement of the damages.
This case highlights the increasing scrutiny of large-scale retail chains attempting to exploit simplified tax regimes. While the government works to secure domestic tax revenues, national security remains a top priority amidst the ongoing war. Protecting the country’s economic backbone is essential for funding defense and critical infrastructure. As Ukraine continues to hold its ground, economic discipline within the commercial sector is becoming just as vital as maintaining stability across all regions of the country. Authorities emphasize that such financial transparency is crucial for the nation’s resilience during these challenging times.