Flowers, sole proprietorships, and over UAH 27.9 million in hidden income: ESBU shuts down business splitting scheme in Volyn

 Flower shops in 10 regions of Ukraine operated as a single network, but sales were registered through separate sole proprietorships. In this way, company officials attempted to reduce tax liabilities and minimize tax payments. In 2025, the enterprise "lost" over UAH 27.9 million in flower sales revenue in its tax reporting and failed to pay UAH 10.6 million in VAT and corporate income tax to the budget.

Detectives of the Territorial Office of the ESBU in the Volyn region have completed a pretrial investigation into tax evasion during the import and sale of flower products.

According to the investigation, the company's management organized an artificial business-splitting scheme. Flower sales through the chain of shops were registered under controlled sole proprietorships operating under the simplified taxation system.

In reality, these sole proprietorships did not run their own businesses, but worked as ordinary hired employees of a single company.

Thanks to this, the enterprise evaded paying UAH 10.6 million in value added tax and corporate income tax in 2025. In particular, it failed to reflect more than UAH 27.9 million in income from flower sales in its tax reporting.

During investigative actions, detectives seized documents, handwritten bookkeeping ledgers, computer equipment, qualified electronic signatures of the controlled sole proprietorships, and other evidence that confirmed the use of the business-splitting scheme.

In addition, ESBU analysts identified risks of customs payment minimization during the import of flowers, specifically through misclassifying product nomenclature and understating the customs value of the goods.

Following the measures taken by the ESBU, flower product imports began to be declared at a higher customs value. As a result, the volume of import operations increased 2.5 times. Compared to the same period last year and an equivalent number of shipments, the declared customs value of the goods increased by UAH 137 million, and the amount of customs duties grew by UAH 36.5 million.

The head of the company was notified of suspicion under Part 3 of Article 212 of the Criminal Code of Ukraine. The damages caused to the state, totaling UAH 10.6 million, were reimbursed in full. Additionally, the perpetrator made a voluntary contribution of UAH 500,000 to support the Armed Forces of Ukraine.

The criminal proceedings were referred to court along with a motion to release the individual from criminal liability on the basis of Part 4 of Article 212 of the Criminal Code of Ukraine due to the full reimbursement of the damages.

The prosecution was overseen by the Volyn Oblast Prosecutor's Office.