Tax risks and fair competition: State Tax Service and food retail discussed common challenges

Tax risks and fair competition were discussed during the meeting between acting Head of the State Tax Service Lesya Karnaukh and the food retail market participants.

“Retail sector of food and related products brought 52.3 billion UAH of tax payments to the budget this year. At the same time, analysis shows that the market can demonstrate better dynamics” – said Lesya Karnaukh.

According to her, the State Tax Service is focusing on managing tax risks in this industry: 

- Salaries in the “envelopes” and unregistered employees.

State Tax Service is working on legalizing labor. Currently, the average salary in the food retail, according to tax reporting in 2025, is 7.6 thousand UAH, which is less than officially established in Ukraine. While the real one is many times higher. 

-  Business “fragmentation” – products sales through a network of individuals-entrepreneurs to minimize tax burden. Overcoming “fragmentation” schemes would be even more effective with a more advanced legislative framework, but we already have results. 

For more than a year, the State Tax Service’s units have established 7 food retail chains, which have involved 1 100 individuals-entrepreneurs in their schemes. Possible tax evasion is at least 470 million UAH. Currently, the Bureau of Economic Security is conducting investigation based on tax materials. 

Since October, 400 actual audits have also been conducted on individual retail chains that showed signs of business fragmentation. Based on their results, it is expected that fines will be imposed in the amount of more than 9 million UAH.

“At the same time, due to our work, 24 extensive retail chains, which numbered more than 700 retail outlets, have recently begun to conduct business activities on the general taxation system” – Lesya Karnaukh emphasized.

Among the common violations that the State Tax Service counteracts:

- Settlements without RRO/PRRO or using non-fiscal checks.

- Understatement of actual supply and revenues.

- Violation of requirements for the sale of excisable products and lack of licenses.

“Demand for fairness in the relationship between the tax authorities and taxpayers is mutual. State Tax Service is working to overcome evasion schemes of individual entities, and honest business expects all players to have the same conditions” – Lesya Karnaukh outlined.

She also emphasized that important tendency that will also drive success of this process is the market’s desire for self-regulation. We already have practical steps after a joint open dialogue with the Bureau of Economic Security and representatives of the sales networks of appliances and electronics. Currently, under the auspices of the business ombudsman, a memorandum is being prepared on fair rules for working in the market: white salaries, official employment and transparent settlements. This is not an alternative to tax control, but it is about a new level of tax culture and taxpayer awareness.  

Acting Head of the State Tax Service thanked the European Business Association, American Chamber of Commerce in Ukraine and Public Union “Ukrainian Food Retail Alliance” and their participants for their willingness to actively communicate and jointly build fair rules for doing business in Ukraine.