UOGA PARTICIPATES IN CONFERENCE ON RETAIL MARKET DE-SHADOWING AND ANTI-SMUGGLING MEASURES

On 31 March, the Ukrainian Oil & Gas Association (UOGA) participated in the 8th quarterly conference “De-shadowing of the Retail Trade and Anti-smuggling: Changing Trends”, organized by the Ukrainian Business Council in cooperation with the American Chamber of Commerce (ACC) and the European Business Association (EBA). The Economic Expert Platform served as the analytical partner of the event.

The Chairman of the Committee on Finance, Tax and Customs Policy of the Verkhovna Rada, Danilo Hetmanchev, noted that since the onset of the war, the trends in de-shadowing the retail sector have changed. He stressed that the observed developments in 2024 are the result of earlier implemented reforms, and his primary objective is to preserve and build on the positive trends through increased transparency, publicity, and public oversight.

Yaroslav Starovoytenko, President of the Ukrainian Oil & Gas Association, expressed his appreciation to the Chair of the Parliamentary Committee on Finance, Taxation and Customs Policy, Danylo Hetmantsev, as well as to the State Tax Service and the National Police’s Strategic Investigations Department, for their efforts in combating illicit schemes in the oil and gas sector.

He emphasized that the fight against illegal fuel trade must be continuous and consistent, as the shadow segment continues to grow. According to industry monitoring conducted by the Association, the number of illegal petrol stations increased from 390 to nearly 420 in 2024. On a positive note, the introduction of advanced profit tax payments has had a positive fiscal impact, and the industry has also seen a rise in average wages.

Yaroslav Starovoytenko

Myroslav Laba, an expert at the Economic Expert Platform, presented analytical data on the shadow economy across key excise sectors. While the share of illicit alcohol and tobacco sales is declining, the shadow fuel market has grown slightly, from 14% to 16%. Overall, 2024 is considered a positive year for excise tax administration, with the government’s revenue target achieved at 103% — including 107% for tobacco, 117% for alcohol, and 95.6% for fuel. Budgetary losses due to illicit trade in excisable goods have decreased from UAH 48–50 billion in 2023 to UAH 35–38 billion in 2024, although shadow levels remain high across all categories.

Additional focus was placed on the internet service provider sector, where a marked shift was observed in Q4 2024: employee wages, previously ranging from UAH 8,000–12,000, have almost doubled to UAH 18,000–25,000. In response, Hetmantsev highlighted the success of limiting peer-to-peer money transfers above UAH 150,000 per month, which reduced the volume of shadow non-cash transactions by UAH 70 billion monthly. According to the National Bank, UAH 50–60 billion of that figure previously represented illegal transfers conducted via “drop” accounts.

Danylo Hetmantsev

Kyrilo Chaikovskyi, representing the “Ukrtyutyun” Association, raised concerns about the rising share of illicit tobacco products in 2025. According to Kantar’s latest data, the share of illegal tobacco rose to 14.1%, with duty-free products doubling from 3.7% to 6.4%, and counterfeit international brands increasing from 6.4% to 7%. Approximately 10 illegal production lines are reportedly operating in Ukraine. The association called for the reinstatement of the “Excise” operation, which had previously yielded effective results in detecting illicit factories.

Andriy Solomin, representing the National Retail Trade Organisation (NORT), described the e-liquid market for electronic cigarettes as one of the most dynamic excise sectors. The main issues include the legal availability of liquid components used across industries, lack of product quality control, and tax avoidance through separate component sales. An estimated 2,500 specialised vape shops operate in Ukraine. Introducing licensing could generate up to UAH 200 million annually for local budgets, and a major producer could contribute up to UAH 405 million per year by 2028.

Andriy Solomin

Hetmantsev added that the key challenge in this segment is proper tax administration. After recent interventions, sales in this market increased thirtyfold — from 41,800 units in Q1 2024 to 1.2 million in Q3 2024. The number of excise stamps rose by 113%, and illegal goods worth UAH 10 million were seized.

Yurii Perohanych, Director General of the Association of IT Enterprises of Ukraine, outlined issues in the consumer electronics and tech markets, where budget losses due to customs violations are estimated at UAH 120–167 billion annually. Proposed solutions include cross-border customs data exchange, fiscal cashback incentives, verification of goods’ origin, and publication of turnover-to-tax ratios — not just top taxpayer lists.

Yurii Perohanych

Oksana Shvets from the American Chamber of Commerce highlighted that the share of illegal smartphone imports exceeds 70% in some segments. The Chamber is tackling illicit trade across five key areas: consumer electronics, tobacco, the restaurant industry, tax evasion via simplified schemes, and the repeal of the EUR 150 duty-free threshold for international parcels.

Tetiana Koshchuk, an expert from Growford Institute, presented findings on the taxation of international parcels. According to her, 99% of parcels are not taxed, leading to projected losses of UAH 17 billion in 2025. She stressed that eliminating the EUR 150 threshold is part of Ukraine’s EU accession commitments and is also recommended by the IMF as a compensatory measure. Adoption of draft laws No. 12429 and No. 12430 this year is therefore crucial.

At the close of the discussion, participants reached a consensus on the issues raised and agreed to jointly work on the necessary regulatory amendments.