New Methods of the State Tax Service for Detecting Tax Violations

In 2025, the State Tax Service of Ukraine (STS) made a true technological breakthrough by introducing innovative methods and approaches for detecting and preventing tax violations. This was driven by serious challenges related to the growth of the digital economy, the spread of new financial instruments, and the real need to reduce administrative pressure on business. Below is an analytical review of key reforms and innovations in the practices of the STS.

1. Automation and Digitalization of Control

The main focus is on maximum automation of data collection, processing, and tax information analysis. In 2025:

• A unified electronic reporting system has been introduced: all taxpayers submit reports only through digital channels, with data immediately entering the STS analytical centers in real time.
• Automatic data comparison and validation: tax authorities use artificial intelligence algorithms to cross-verify indicators from various sources (reporting, bank data, market information, customs statistics), identifying discrepancies even without onsite audits.

2. Shifting the Focus to Analytics and Risk-Based Approach

The STS has made a major shift from “mass” checks to risk-based audits:

• Risk as a criterion: new risk codes and improved sets of criteria for risk-bearing taxpayers have been introduced. Focus is placed on tracking fictitious transactions, suspicious dealings between related parties, operations by companies without real addresses or resources, and export of goods of unknown origin.
• Automated analysis of tax credits and correction of relationships: discrepancies between tax invoices, VAT registration, etc., are systematically detected. This quickly blocks schemes involving artificial inflation of tax credits.

3. IT Integration and Information Exchange

In cooperation with the Economic Security Bureau and Financial Monitoring Service in 2025:

• “Trembita” Data Exchange Platform: transaction data exchange takes place via secure channels, with full audit tracking. Systematic exchange of operational data makes it possible to uncover not only classic “schemes” but also complex ones involving cryptocurrencies or latest IT tools.
• Integration of the STS with bank, customs, and market operator systems: enables tracing asset movement chains and matching suspicious movements.

4. Combating Abuses in Online Commerce

2025 saw mass control over internet sales:

• Access to PPO data and banking payments: The STS can identify not only legally registered entrepreneurs but also “grey” market participants by analyzing bank transactions on individuals’ cards.
• Detection of business activity patterns: systems automatically monitor transaction regularity, track PPO use by individuals, and detect signs of hidden entrepreneurship.

5. Tax Risk Management System

• Permanent monitoring and updating risk profiles: the STS risk appetite is continuously adjusted, adapting to offenders’ changing tactics (e.g., mass use of crypto assets or “shadowing” turnovers via new platforms).
• Use of external digital resources: The STS analyzes data from open state registers, market, social networks, and classified ad aggregators to map connections between entities and search for illegal trading/service platforms.

6. Moratorium, Deregulatory Initiatives, and Balance Between Control and Trust

• Moratorium on unjustified audits: at the same time, the STS preserves the right to conduct only risk-based, well-motivated audits with full video recording and mandatory justification of interference, reducing administrative pressure on business.
• Involvement of business in developing audit criteria: the STS conducts open consultations, making audits more predictable and transparent.

7. Raising Anti-Corruption and Compliance Standards

• Use of an employee action audit system: public and business monitoring of tax officers’ decisions, introduction of whistleblower tools.
• High level of cybersecurity: all IT systems undergo regular audits, with resistance to leaks of personal and official data regularly checked.

8. Practical Results in the Shadow Economy Sphere

This year the results have included:

• Dozens of “schemes” and shell companies blocked online.
• Notably increased additional tax charges due to fast automatic identification of fictitious transactions.
• Time from violation detection to actual blocking of suspicious activities has dropped from weeks to hours or days.
• The number of criminal proceedings reaching court has increased, due to high-quality evidence gathered using new algorithms.

9. Conclusion: Transformation of Tax Management as the Key to Economic Resilience

The STS practice in 2025 shows that combining digital technologies, analytics, automation, and transparent interaction with business and law enforcement enables effective counteraction to modern tax violations. The main priority is preventive, not punitive. Such methods boost compliance, strengthen public trust, and create conditions for a transparent, competitive Ukrainian economy under wartime and tighter international scrutiny.

Key Highlights:

• The STS automates all processes of data collection and analysis.
• Risk identification forms the base for targeted inspections.
• Effective information exchange among agencies decreases “schematic” activity.
• E-commerce is under total digital supervision.
• Updated risk-management and compliance systems guard the economy against losses.

Ukraine has started a new stage of tax control, maximally tailored to modern challenges and EU standards.

Author: Ihor Yasko, Managing Partner, Law Firm “WINNER”, PhD in Law.