Tax-free construction: A 10-million UAH scheme uncovered in the Odesa region

 In the Odesa region, prosecutors accuse the director of a construction enterprise of organizing a tax evasion scheme involving nearly 10 million UAH. The illicit activity was linked to building modern, comfort-class residential complexes in Odesa. The indictment has been forwarded to the court.

Detectives from the Territorial Office of the Economic Security Bureau of Ukraine in the Odesa region established that during 2019–2020, the head of the company reflected transactions for the purchase of construction works in tax reporting. In reality, these works were never performed.

To implement the scheme, documents regarding construction services allegedly provided by another company were used. Their cost was included in the enterprise's expenses and used to form a VAT input tax credit, thereby artificially reducing the company's tax liabilities.

As a result, according to the investigation, the state budget suffered a shortfall of 9.84 million UAH in taxes. Of this amount, 6.35 million UAH was value-added tax (VAT), and an additional 3.49 million UAH was corporate income tax.

During the pre-trial investigation, detectives analyzed the financial and business documentation, accounting records, and transactions with counterparties.

Specifically, they established that the individual under whose name the counterparty enterprise was registered did not actually manage its operations. This person performed no construction work and did not sign the relevant primary documents.

The total amount of unpaid taxes was confirmed by the findings of a forensic economic expert examination.

To ensure the restitution of damages caused to the state, the court placed a freeze on the assets (placed an arrest on the property) of the accused. Additionally, the prosecutor filed a civil lawsuit to recover 9.84 million UAH for the state budget.

The actions of the enterprise's director have been qualified under Part 3 of Article 212 of the Criminal Code of Ukraine—intentional tax evasion on an especially large scale. The sanction of the article provides for a fine, deprivation of the right to hold certain positions or engage in certain activities for a term of up to three years, and confiscation of property.

The pre-trial investigation and operational support were carried out by detectives of the Territorial Office of the ESBU in the Odesa region. Prosecutorial guidance was provided by prosecutors of the Odesa Regional Prosecutor's Office.

Pursuant to Article 62 of the Constitution of Ukraine, a person is presumed innocent until their guilt is proven through legal procedures and established by a court's verdict of conviction.