Over 3,500 individual entrepreneurs for 400 stores: Poltava region's largest local retail chain used "business fragmentation" to evade taxes

 Detectives of the Main Detective Unit of the Economic Security Bureau of Ukraine, together with the Bureau’s Territorial Office in the Poltava region, have conducted large-scale searches of a retail chain. These investigative actions were conducted to identify and document evidence of the circumstances of a criminal offense.

This refers to the largest local grocery store chain in the Poltava region, which operates over 400 stores across seven regions of Ukraine. Specifically, it has a presence in the Poltava, Kyiv, Sumy, Dnipropetrovsk, Chernihiv, Cherkasy, and Kirovohrad regions.

The company utilized a 'business fragmentation' scheme to evade taxes, involving over 3,500 individual entrepreneurs (sole traders) in its activities. Some were registered using employees' names, while others were set up through third parties, including students and retirees. In reality, these individuals performed the duties of regular salaried employees but were legally registered as independent entrepreneurs.

Dozens of individual employees were also involved in registering these entrepreneurs, maintaining 'shadow' accounting records, paying salaries in envelopes, and ensuring that the entrepreneurs' incomes did not exceed the limits established by law.

Distributing the business among numerous individual entrepreneurs allowed the company to avoid paying the taxes required for corporate legal entities. As a result, the state budget lost millions of hryvnias in potential revenue.

Following the searches, detectives seized documents, bank cards, computer equipment, draft records, unrecorded cash, and storage media confirming the illegal activities of the group of individuals.

The pre-trial investigation is ongoing.

The procedural supervision is carried out by prosecutors from the Prosecutor General's Office, while operational support is provided by detectives from the Strategic Economic Protection Unit of the Territorial Office of the ESBU in the Poltava Region.