The ESBU has uncovered a scheme to fragment a retail chain in the Poltava region
Detectives from the Main Detective Division of the Economic Security Bureau of Ukraine, in conjunction with the Economic Security Bureau’s Regional Office in Poltava Oblast, carried out searches at a retail chain. The investigative measures were taken to establish the circumstances of a possible criminal offence.
This concerns the largest local chain of grocery stores in the Poltava region, which comprises over 400 stores and operates in the Poltava, Kyiv, Sumy, Dnipropetrovsk, Chernihiv, Cherkasy and Kirovohrad regions.
According to the investigation, the company used a business fragmentation scheme to evade tax payments. Over 3,500 individual entrepreneurs were involved in the scheme.
Some of the sole traders were registered in the names of the chain’s employees, while others were registered in the names of third parties, including students and pensioners. In practice, they performed the duties of employees but were registered as sole traders.
The investigation established that all these sole traders operated as a single, centrally managed network. The organisers controlled revenue levels to ensure they did not exceed the limits of the simplified taxation system.
Dozens of people were also involved in the scheme, registering sole traders, maintaining shadow accounts, paying wages in cash envelopes and monitoring financial indicators.
This structure of the business allowed them to avoid the taxes applicable to legal entities. According to preliminary estimates, the amount of underpaid income tax exceeds 386 million hryvnias. In total, the budget lost millions of hryvnias.
During the searches, detectives seized documentation, bank cards, computer equipment, draft records, unaccounted-for cash and other data storage devices.
The pre-trial investigation is ongoing. Prosecutors from the Office of the Prosecutor General are overseeing the proceedings, whilst operational support is being provided by detectives from the Territorial Directorate of the Security Service of Ukraine in Poltava Oblast.
In accordance with the Constitution of Ukraine, a person is presumed innocent until proven guilty in court.
