Ukraine can additionally generate up to UAH 500B per annum through deshadowing – Hetmantsev

The relevant statement was made by Chairman of the Verkhovna Rada Committee on Finance, Taxation and Customs Policy Danylo Hetmantsev in an interview with Ukrinform.

At the same time, he admits that the above refers to theoretical calculations only. After all, the problem of the shadowing of Ukraine’s economy cannot be resolved “in one go”. Hence, at the initial stage, it may realistically be about replenishing the budget by an additional UAH 80 billion every year.

Hetmantsev mentioned that important steps had already been taken in that regard. Tax revenues from certain industries with traditionally high risks of being “in the shadow” are increasing.

“For example, since the beginning of the year, tax revenues from the production and sale of alcoholic beverages have exceeded the target by 18.1%. The legal sales volume of ethanol increased by 30% last year. Obviously, people did not start drinking more – we lost the territories, millions of Ukrainians fled abroad or are currently staying in the temporarily occupied areas… But, the official sales volume of alcohol increased, and the reason is precisely the industry’s deshadowing,” Hetmantsev explained.

In his opinion, this is also confirmed by other figures. For example, the tax efficiency of the value-added tax (VAT) payments transferred by distilling enterprises rose from 4.5% in 2021 to 6.16% in 2024.

“Let’s say, the tax load increased from 5.3% to 7.84% in Global Spirits Group (Khortytsia brand), from 4.7% to 8.5% in LVN Limited (Nemyriv), from 0% to about 14% in Hetman Plant. And this is evidence that the industry is ‘coming out of shadow’. Meanwhile, the general tax load on the jewelry industry increased by 2.2 times in annual terms,” Hetmantsev noted.

The same goes for fuel. In the first quarter of 2024, the tax load amounted to UAH 2 per liter. By comparison, it was around UAH 1.12 in 2022 and UAH 1.8 in 2023.

The situation in the tobacco industry is also improving.

“Despite the fact that the market conditions are still not as they should be in a civilized state, the ‘shadow sector’ has reduced from 23% to 18% this year. The Economic Security Bureau seems to have turned serious attention to this sector,” Hetmantsev concluded.

A reminder that, in the first half of 2024, the Ukrainian State Tax Service exceeded the planned target for budget revenues by UAH 53.3 billion. In particular, the VAT revenues rose by 48.8% compared to the same period last year.

In January-June 2024, Ukraine’s consolidated budget revenues from the payments controlled by the Ukrainian State Tax Service reached UAH 780.7 billion. A total of UAH 580.6 billion was transferred to the state budget, and UAH 200.1 billion – to local budgets.