Over UAH 4.2 million in taxes returned to the budget: ESBU in the Zakarpattia completes investigation

 Detectives of the Territorial Office of the ESBU in the Zakarpattia region have completed a pre-trial investigation in criminal proceedings regarding tax evasion by company officials. The damages caused to the state have been reimbursed.

The investigation established that the director of a private enterprise, which produces and sells bakery products in the region, organized a tax optimization scheme between 2022 and 2023. This was implemented through the artificial splitting of the business.

Specifically, to understate corporate income tax and value-added tax (VAT), he engaged seven individual entrepreneurs (FOPs) who used the simplified taxation system and were not VAT payers.

In reality, business operations were conducted as a single entity under the organizer's control; however, the sale of products through a retail chain was documented under the control of individual entrepreneurs. Consequently, the main enterprise did not record the generated income in its tax and accounting reports, thereby minimizing corporate income tax and VAT.

In this manner, over UAH 10.9 million in income remained off the official records. As a result of these illegal actions, over UAH 4.2 million in taxes failed to reach the state budget, including nearly UAH 2 million in corporate income tax and over UAH 2.1 million in VAT.

ESBU detectives gathered sufficient evidence of the illegal activity, including forensic economic expertise findings, analytical materials, and witness testimonies.

The head of the enterprise was notified of suspicion under Part 1 of Article 212 of the Criminal Code of Ukraine (intentional tax evasion in significant amounts).

During the pre-trial investigation, the damages caused to the state were reimbursed in full. Consequently, a motion was submitted to the court to release the individual from criminal liability based on Part 4 of Article 212 of the Criminal Code of Ukraine (exemption from liability in the event of full payment of taxes and reimbursement of damages).

The entrepreneurs were provided with recommendations to eliminate the identified risks, specifically to stop using individual entrepreneurs (FOPs) for business splitting and to transition to a transparent business model using a legal entity (LLC).

Procedural oversight was carried out by prosecutors of the Zakarpattia Regional Prosecutor's Office.