AmCham Ukraine held a high-level discussion on the urgent issue of combating the shadow economy with the participation of the Delegation of the European Union to Ukraine, MPs, representatives of state authorities, including law enforcement agencies, and business.
The roundtable discussed the shadow markets of retail and e-commerce, tobacco products, HoReCa, consumer electronics, alcoholic beverages, and fixed-line internet providers.
The newly appointed Prosecutor General Ruslan Kravchenko emphasized his readiness to actively cooperate with honest businesses to develop and implement the most effective measures to stop illegal activities.
Retail and e-commerce
Businesses note 3 main problems:
- Distortion of competition due to the VAT exemption for imports of goods worth less than EUR 150 from international trading platforms. In 2024, Ukraine received more than 75 million goods shipments, most of which were clothing, footwear, and accessories. This privilege not only distorts competition but also causes losses to the State Budget, estimated by AmCham Ukraine member companies' experts at around UAH 19 billion for 2024 alone.
- Minimization of the tax burden by splitting retail chains into separate entities with business activities through individual entrepreneurs.
- Unofficially employed workers and, accordingly, unofficial payment of wages.
Food service industry
The shadow food service market in Ukraine today consists of establishments that use the simplified taxation system, lack the necessary permits, do not pay taxes or do not comply with the law. As of now, there are over 100,000 registered food service establishments in Ukraine, with only 15% of them being LLCs. According to open data, 5 LLCs account for 30% of all tax payments from the sector. This results in unfair competition and reduced revenues for the State Budget.
Tobacco industry
Kantar Ukraine presented the results of the research “Monitoring of Illicit Trade in Tobacco Products in Ukraine 2025. Wave 2”, aimed at identifying and tracking illegal tobacco products in Ukraine.
In April 2025, the volume of the illicit tobacco market grew again, reaching 16.2%, while the share of counterfeit products rose to 8.8%. At this level of illicit cigarette products on the Ukrainian market, the annual losses to the State Budget of Ukraine due to unpaid taxes are estimated at UAH 25.2 billion, and the size of the shadow cigarette market exceeds 5 billion cigarettes in 2025.
A significant share of illegal products consists of items marked “Duty Free” or labeled for export but sold illegally within Ukraine. Over half of such products, based on packaging information, are produced by the Vynnykivska Tobacco Factory. Compliment (47%) and Lifa (5%) are the main brands in this category. The remaining 43% of illegal products are brands produced by Marshall Finest Tobacco, with the most common being Marshall (26%), Urta (9%), and Brut (3%).
The largest volumes of illicit tobacco trade are recorded in six regions, which together account for 71% of this market: Dnipro region – 27%, Odesa region – 13%, Lviv region – 10%, Kharkiv region – 9%, Kyiv region and the city of Kyiv – 7%, and Khmelnytskyi region – 6%.
The following were mentioned as examples of the necessary steps to be taken by the authorities to combat the shadow tobacco market:
- conducting control and verification measures and state examinations by the State Tax Service in relation to the products specified in the study in order to identify the manufacturers of such illegal products;
- adoption of the Draft Law #9364 on improving liability for illegal trafficking of excisable goods, which was adopted by the Verkhovna Rada of Ukraine (VRU) in the first reading in April 2024.
There was also a voiced a proposal to create a library of finished product samples. This tool would help to quickly identify the equipment used to manufacture the illegal products found on the market. The creation of a library would significantly enhance the ability of law enforcement agencies to combat the illegal market.
Lesia Karnaukh, Acting Head of the State Tax Service of Ukraine, expressed the readiness of the State Tax Service (STS) to be involved in this work and emphasized the need to define clear actions, including from the business side.
Alcohol products
Illegal producers continue to dump prices by excluding taxes from their pricing strategy, giving them an unfair advantage over legal businesses. Minimum retail prices for alcoholic beverages were revised annually until 2018. Today, businesses are calling on the Government to urgently adopt the Draft Resolution of the Cabinet of Ministers of Ukraine (CMU) “On Approval of the Procedure for Determining Minimum Wholesale and Retail Prices for Alcoholic Beverages”. Revising minimum retail prices could generate over USD 51 million in additional tax revenues for the State Budget.
Consumer electronics
The main share of the shadow market is made up of expensive and small-sized goods, such as smartphones, laptops, watches, headphones, and premium small and large household appliances.
For example, according to estimates from AmCham member company, in the first quarter of 2025 the shadow market share for certain smartphone models exceeded 80%, resulting in nearly UAH 1.5 billion in lost VAT and customs duties. At the same time, estimated losses of VAT and duties for other electronic devices of a specific brand, including laptops and tablets, exceeded UAH 1.8 billion. Experts forecast total losses for 2025 at UAH 10 billion.
Fixed Internet providers
The position of the Ministry of Finance of Ukraine and the STS on the need for Internet providers to switch to the general taxation system from October 1, 2024 was supported by the CMU and the relevant Parliamentary Committee. The business calls for further consistent adherence to this position.
For almost 10 months of the general taxation system, we can note positive trends in the closure of individual entrepreneurs who used non-transparent business models, consolidation of the subscriber base of a number of companies that practiced splitting, as well as a significant increase in tax revenues from this type of activity. From the first quarter of 2024 to the first quarter of this year, there was an increase in tax payments in the industry (Internet providers, except for national mobile operators) from UAH 0.8 billion to almost UAH 1.19 billion per quarter.
At the same time, part of the market is trying to look for alternative mechanisms to avoid taxation, in particular through: the use of individual entrepreneurs to provide Internet services with “non-core Classification of Types of Economic Activity (CTEA) codes in the field of electronic communications”; accepting payments to the details of individual entrepreneurs with non-core CTEA codes (e.g., “advertising services”, “information services”); transferring funds for Internet services to the accounts of business entities that are not registered in accordance with the Law of Ukraine “On Electronic Communications” and therefore operate illegally, etc.
To solve most of these problems, joint coordinated work of all state authorities, including law enforcement agencies, as well as the bodies currently being reformed - the Economic Security Bureau of Ukraine and the State Customs Service of Ukraine - is needed. The business community emphasizes the need to ensure a level playing field in the market and fair taxation for all players without exception.
We would like to thank all participants who joined the discussion and are actively involved in the issues of combating the illegal markets in Ukraine. In particular, the event was attended by representatives of AmCham Ukraine member companies and also:
representatives of the Parliament
- Danylo Hetmantsev, MP, Head of the VRU Committee on Financial Issues, Tax and Customs Policy;
- Yaroslav Zheleznyak, MP, Deputy Head of the VRU Committee on Financial Issues, Tax and Customs; Policy
- Maksym Pavliuk, MP, Deputy Head of the VRU Committee on Law Enforcement.
representatives of state authorities
- Lesia Karnaukh, Acting Head of the State Tax Service of Ukraine;
- Ruslan Kravchenko, Prosecutor General;
- Maksym Krym, Deputy Prosecutor General;
- Dmytro Oliynyk, Deputy Governor of the National Bank of Ukraine;
- Semen Kryvonos, Director of the National Anti-Corruption Bureau of Ukraine;
- Oleksiy Kalynovych, Deputy Director of the Department for Combating Smuggling and Customs Violations of the State Customs Service of Ukraine;
- Ivan Pysarchuk, Deputy Head of Department - Head of Division of the Department of Strategic Investigations of the National Police of Ukraine;
- Iryna Horodnyk, Deputy Head of Department of the Main Investigation Department of the National Police of Ukraine;
- Zoriana Stetsiuk, Director of the Directorate for Public Services Reengineering of the Ministry of Digital Transformation of Ukraine;
other invitees
- Roman Waschuk, Business Ombudsman;
- Francesco Floris, Trade Representative of the Delegation of the European Union to Ukraine;
- Svitlana Vynoslavska, Managing Director of Kantar Ukraine;
- Danylo Molchanov, Project Manage of the UK DIGIT;
- Andriy Kharitonov, Senior Program Manager of the Eastern Europe Foundation.
