ESBU uncovers business splitting scheme in Odesa: the entrepreneur concealed UAH 71 million in income

 Detectives of the Territorial Office of the ESBU in the Odesa region have completed a pre-trial investigation into intentional tax evasion through artificial business splitting. The entrepreneur concealed UAH 71 million in income.

The investigation established that a 34-year-old resident of the Bolhrad district organized a network of clothing and footwear stores across the Odesa, Mykolaiv, and Vinnytsia regions. Sales were conducted through retail outlets, social media, and postal shipments throughout Ukraine. The product range included footwear, tracksuits, sneakers, backpacks, wallets, and other related goods.

To minimize tax liabilities, the suspect registered 15 controlled individual entrepreneurs (FOPs) and opened bank accounts for them. Formally, they operated as separate business entities, but in reality, all activities were controlled by the scheme's organizer. He distributed the revenue among the FOPs and ensured their turnovers did not exceed the limits of the simplified taxation system. In this way, income was artificially «split,» and tax liabilities were reduced.

In fact, during one year of operation, the entrepreneur earned over UAH 76 million in income but declared only UAH 5 million. More than UAH 10.6 million in taxes remained unpaid to the budget, which constitutes a particularly large-scale loss.

During 15 sanctioned searches of stores, offices, and warehouses, detectives seized UAH 426,500 in cash, over 23,000 units of goods, office equipment, and rough records. The total value of the seized property is nearly UAH 33.4 million.

Based on the evidence collected, the man was served with a notice of suspicion under Part 3 of Article 212 of the Criminal Code of Ukraine (intentional tax evasion). During the pre-trial investigation, he voluntarily reimbursed UAH 10.6 million in unpaid taxes—the funds have already been transferred to the budget. The criminal case has been sent to court.

By the conclusion of the investigation, the business-splitting scheme had been terminated. The entrepreneur has committed to registering a legal entity and operating in compliance with the Tax Code of Ukraine, including the official employment of staff.

Analysts of the Territorial Office of the ESBU will monitor the company's future tax payments to prevent further violations.

Operational support was provided by detectives from the Strategic Economic Protection Department of the Territorial Office of the ESBU in the Odesa region and the Strategic Investigations Department of the National Police of Ukraine in the Odesa region.

Prosecutorial oversight is conducted by the Odesa Regional Prosecutor's Office.