Seven retail chains that used the "business fragmentation" scheme exposed in Ukraine

The State Tax Service has identified seven large retail chains that have been evading taxes through a business split scheme. About this said acting Head of the State Tax Service Lesya Karnaukh.

Due to this scheme, the Ukrainian budget lost UAH 668.5 million in value-added taxes (VAT).

According to the State Tax Service, six of these chains sell household appliances and electronics, and another sells women's clothing and footwear.

The essence of the scheme was that the activities of a legal entity were artificially distributed among dozens of individual entrepreneurs on a simplified taxation system.

In total, the tax authorities identified 491 such individual entrepreneurs with a total income of over UAH 4 billion.

Although they formally looked like independent entrepreneurs, tax inspections showed that they were linked: they used the same IP addresses, shared registration addresses, worked in the same outlets, under the same brand name, and even employed the same people.

All materials on the detected facts of offenses were transferred to the Bureau of Economic Security of Ukraine for further investigation.

• In March, the State Tax Service announced exposing a scheme of "business fragmentation" in two well-known electronics chains which resulted in VAT evasion of over UAH 286 million.