Flower smuggling in Ukraine reaches $1.6 bln - MP

MOSCOW. March 3 (Interfax) - The flower market in Ukraine is 78% shadow market, with total state budget losses from tax evasion and smuggling schemes in this sector estimated at UAH 2 billion per year, head of the parliamentary finance, tax, and customs policy committee Daniil Getmantsev said.

"According to our data, only 22% of the actual volume of flower products is imported into Ukraine legally. In 2024, 1,500 tonnes were declared, while according to the international Trade Map database, this figure is almost 7,000 tonnes. The volume of smuggling is estimated at $1.6 billion last year alone, and direct budget losses from VAT nonpayment alone exceed UAH 324 million," Ukrainian media quoted him as saying on an online channel.

A critical situation has emerged in the rose import segment, Getmantsev said. Of the total 3,000 tonnes entering the Ukrainian market, only 136 tonnes have undergone official customs clearance. This indicates the systematic use of schemes to understate customs value and conceal the import of goods.

The domestic market is based on the massive fragmentation of businesses, he said. More than 13,600 individual entrepreneurs (IEs) are currently engaged in flower sales, while only around 40 active legal entities operate in this sector. This structure enables large chains to avoid VAT and corporate income tax by operating through IEs of the second group.

Getmantsev drew attention to the issue of shadow wages in the sector. In job advertisements, large chains list wages of 17,000-36,000 UAH, while tax reports show minimum payments. This allows companies to minimize their payment of the unified social contribution and personal income tax.

The scale and systematic nature of such schemes indicate a deliberate disregard for the issue on the part of regulatory and law enforcement agencies.