Ukraine's shadow economy exceeds UAH 1 trln - MP

MOSCOW. Feb 9 (Interfax) - The amount of taxes lost due to shadow schemes in Ukraine is estimated at more than UAH 1 trillion, Ukrainian media reported, citing head of the parliamentary Committee on Finance, Tax and Customs Policy Daniil Getmantsev as saying on the TAX Podcast.

The Ukrainian economy's key problems remain smuggling, untaxed salaries in envelopes and VAT manipulation due to the fragmentation of large businesses into a network of individual entrepreneurs.

"We have more than UAH 1 trillion in the shadow economy. This money could be used to increase salaries for teachers, doctors and to pay pensions. Currently, these funds are actually being washed out of the budget and the army," Getmantsev said.

The practice of using individual entrepreneurs by large retail chains to evade VAT distorts the market environment. As an example, he cited franchise schemes in the retail sector, where several checks are issued at the cash registers: one for alcohol in accordance with the general system, and the other via an individual entrepreneur. This gives such enterprises an undue advantage of 7%-20% due to unpaid VAT, he said.

"If we allow the parallel existence of white and black systems within the same jurisdiction, we have no future for the normal development of the economy. This disrupts the conditions for fair competition, which affects transparent business," he added.

The de-shadowing of the excisable goods market (fuel, tobacco, and alcohol) remains the parliament's priority for 2026, Getmantsev said. Despite certain achievements in the fuel sector, the tobacco industry saw a rollback at the end of 2025, when the illegal market's share increased to 18% again.

As reported, the state budget received an additional approximate $2.5 billion thanks to de-shadowing measures in 2024.