Tax service detects over 500 brands with signs of business splitting

The State Tax Service has identified over 500 brands and trademarks with signs of artificial business splitting since the beginning of 2026. Potential state budget losses due to tax evasion are estimated at a minimum of UAH 1.7 billion.

Based on the results of analytical studies, the tax authorities have identified 23 large retail chains that could have used over a thousand individual entrepreneurs in their activities.

The collected materials have already been submitted by the State Tax Service to law enforcement agencies. Pre-trial investigations are currently underway regarding the discovered facts. The names of the brands and retail chains are not disclosed in the service's statement.

Additionally, State Tax Service specialists are examining the possible use of similar schemes in another 18 large retail chains. This refers to sellers of clothing, footwear, electronics, watches, cosmetics, and household chemicals, as well as public catering establishments.

Head of the State Tax Service Lesia Karnaukh emphasized that registering a business as an individual entrepreneur or a company’s cooperation with entrepreneurs is not a violation in itself.

Signs of artificial splitting may arise when dozens of individual entrepreneurs work only formally as independent business entities, but are actually parts of a single company. In particular, they may use a common brand, trade premises, employees, warehouses, and centralized management.

Such schemes can be used for applying the simplified tax system, avoiding registration as a VAT payer, or reducing the tax burden. At the same time, the final legal assessment of the actions of specific companies and entrepreneurs should be provided by law enforcement agencies and the court.

The State Tax Service stated that combating artificial splitting is necessary to create equal competitive conditions. According to Karnaukh, honest businesses should not find themselves in a worse position compared to companies that minimize taxes using formally independent individual entrepreneurs.

Based on materials from: State Tax Service of Ukraine