The Economic Security Bureau of Ukraine continues to uncover tax evasion

The Economic Security Bureau of Ukraine (ESBU) is showing a stable trend towards increasing the number of proceedings for tax evasion, focusing on complex, systemic schemes and significant amounts of losses to the state budget. For businesses this means a fundamentally new level of attention to tax risks, particularly to business “fragmentation”, undeclared income and understatement of the tax base.​

New ESBU focus

Over the past few years, investigations of tax evasion have gradually become one of the key areas of the ESBU’s work, both in terms of the number of proceedings and the intensity of investigative actions. Statistics indicate a rise in criminal proceedings for tax offences, as well as an increase in notices of suspicion and asset seizures in such cases.

At the same time, the volume of covert investigative actions is growing – wiretapping, account monitoring, surveillance – creating a new reality for business in which “grey” tax optimisation is increasingly subjected to criminal scrutiny rather than mere additional tax assessments. This approach meets the demand for de‑shadowing the economy but also amplifies the risk of coercive pressure on taxpayers operating in high‑risk segments.

Typical evasion schemes

One of the most notable trends is the fight against business “fragmentation”, where a chain of shops or services is formally split into dozens of sole proprietors or small entities in order to keep simplified taxation and avoid VAT or higher income tax rates. In practice, such structures are fully controlled by the same owners, operate under a single brand and essentially function as one business, which the ESBU qualifies as deliberate large‑scale tax evasion.

Another common category of cases involves the use of foreign platforms, intermediaries and non‑resident accounts to move revenue abroad with its subsequent “return” as alleged information or intermediary services. In such models a portion of actual income is intentionally not declared, resulting in tens of millions of hryvnias in unpaid taxes, and the organisers’ actions are qualified under Part 3 of Article 212 of the Criminal Code of Ukraine, with additional qualification for money‑laundering and use of forged documents.

Sectoral overview

Practical ESBU cases include matters in the fuel sector, where company officials understate real fuel‑sales income by tens of millions of hryvnias, leading to substantial underpayment of corporate income tax and VAT and subsequent asset seizures to secure damage recovery. In other regions, the ESBU records evasion schemes based on fragmentation of retail chains, where more than a hundred controlled sole proprietors are used to minimise tax liabilities and to support parallel smuggling of equipment.

Illustrative examples are also found in manufacturing and processing, where tax evasion is accompanied by significant seizures of inventory and other assets, and in some cases tens of millions of hryvnias are returned to the budget through paid taxes and confiscated assets. Such stories are actively communicated via ESBU official channels and the media, signalling to business that large amounts and systemic schemes have become priority targets for detectives.

Statistics and legal consequences

Official ESBU data show that the number of criminal proceedings involving tax offences is in the thousands, and the share of tax crimes is among the highest in the Bureau’s case‑load. The number of court warrants for covert investigative actions and asset seizures is also increasing, indicating a shift towards a more aggressive strategy for documenting evasion schemes and ensuring actual recovery of losses.​

For specific taxpayers the consequences may include the opening of criminal proceedings under Article 212 of the Criminal Code of Ukraine, as well as restrictions on access to assets, account blocking and the risk of suspicion being served on managers and beneficial owners. In some cases, a person may be released from criminal liability if all losses are fully compensated, but this does not negate the reputational and financial damage incurred during the investigation.

How business should adapt

Current ESBU practice shows that the highest risks arise from models based on artificial business splitting, misuse of the simplified tax regime, off‑the‑books wage payments, and non‑transparent cross‑border settlements. Businesses that continue to rely on such approaches should expect not only additional tax assessments but also criminal‑law consequences for owners, directors, and key officers.​

A compliance strategy for 2025 should include an audit of the corporate structure, an analysis of transactions with non‑residents, verification of salary transparency, as well as readiness to communicate with the ESBU and defend the company’s position within the legal framework. It is important to involve legal advisers in a timely manner who can assess the criminal‑law risks of the business model, develop an action plan in the event of searches or asset freezes, and build an evidentiary basis confirming the lawfulness of the company’s tax conduct.​

Author: Ihor Yasko, Managing Partner at WINNER Law Firm, PhD in Law.​

If you have any questions or issues related to tax risks, interaction with the ESBU, criminal proceedings under Article 212 of the Criminal Code of Ukraine, or the need for a comprehensive audit of your business model, contact the Winner Law Firm team for an individual consultation and protection of your interests.