13.01.2025 Investigations Money laundering

How Hetmantsev, the Servant of the People, makes money on the illegal business of giant companies

Recently, Danylo Hetmantsev, a member of parliament and chairman of the Committee on Finance, Taxation and Customs Policy, initiated changes to the legislation regarding the taxation of parcels from abroad. The draft laws proposed by Hetmantsev promise serious changes for Ukrainians who are used to ordering goods from abroad without significant taxes. It has been reported that if these changes are adopted, all parcels, regardless of value, will be subject to a 20% VAT, and goods worth more than EUR 150 will be subject to an additional 10% duty.Only those sent by individuals to other individuals without commercial purposes and worth up to EUR 45 (currently UAH 2000) will be exempt from VAT.

To simplify VAT administration, a mechanism similar to IOSS (as in the EU) is being introduced, which allows VAT to be paid directly by the supplier of goods – through marketplaces or other platforms.

The changes, if adopted, will mean that all foreign purchases via the Internet will become 20% more expensive for Ukrainians. However, the question is why the government is focusing on the parcels of ordinary citizens when large companies continue to evade taxes through various schemes?

For example, you should pay attention to the following questions:

  1. How do large chains import goods?
    Large retailers such as iPeople, Yabko, Citrus and others often use smuggling schemes to import goods into Ukraine, declaring low prices for equipment or not paying any duty at all.
  2. Do they declare the real prices of the goods?Many companies underestimate the value of imported goods to reduce customs duties and VAT. For example, if the value of goods at customs is much lower than the real value, the country actually loses significant amounts of taxes.
  3. How many fictitious individual entrepreneurs are used to sell goods?Large businesses often operate through a network of fictitious individual entrepreneurs, which allows them to reduce their tax liabilities, evade inspections, and even avoid paying part of the VAT. This allows them to sell goods while maintaining high margins and minimizing tax costs.

The problem is that while ordinary citizens will be forced to pay VAT on every parcel, large chains that form the bulk of the Ukrainian electronics market will continue to circumvent the law. For example:

  • Epicenter: Due to its agricultural business, this chain does not actually pay VAT on imports. The state already pays VAT for Geregas’ agricultural exports, which allows it to significantly reduce its tax liabilities when importing other products.
  • Yabko and ALLO: These chains are still actively importing products, declaring them at low prices. For example, when importing Chinese electronics, goods can be declared at customs at $20, although their actual value can reach $300. As a result, no real VAT is paid on these goods, and only a part of the tax is collected from the buyer at the retail level.

iPeople: How fictitious individual entrepreneurs avoid taxes and customs payments

The iPeople chain of stores, which supplies Apple equipment, operates not only in the official but also in the “gray-green” zone. Together with the customs and tax authorities, it actively evades taxes by using fictitious individual entrepreneurs to conduct financial transactions.

Apple equipment is imported to Ukraine without certifications and under false customs declarations, which allows it to reduce the customs value of goods and avoid paying duties and VAT. Dozens of fictitious individual entrepreneurs are used to circumvent tax liabilities, through whom the sale of goods is carried out.

The proceeds are withdrawn through controlled companies and individuals, often through schemes with forged documents. These schemes allow iPeople to operate on huge margins, hiding the real amount of income.

Based on our materials, tax audits were conducted at the chain of stores, in particular at the Kyiv representatives, where violations of tax legislation were found. In addition, the State Bureau of Investigation is already conducting an investigation in the proceedings No. 62021000000000748 under Part 2 of Article 364, Part 5 of Article 191 of the Criminal Code of Ukraine.

“Yabko“: Billions in tax evasion through smuggling

The Yabko chain has become known for its large-scale violations of customs legislation and tax evasion worth billions of hryvnias. The company is known to have evaded taxes worth UAH 3.3 billion in the last two years alone.

Apple equipment, such as iPhones, iPads, MacBooks, and iPeople, is imported into Ukraine from Southeast Asia through fictitious customs declarations, where prices are understated or other goods are indicated.

Payments for the equipment are made through dozens of “front” individual entrepreneurs, which allows them to avoid taxes. Part of the money received for uncertified equipment is legalized through cryptocurrency exchanges or affiliated gas station chains, such as OKKO, to buy assets abroad.

This allows the company not only to avoid taxes, but also to launder funds that can be used to shelter capital abroad.

We also filed applications to law enforcement and regulatory authorities regarding this case, which revealed that the security forces were already actively investigating Yabko’s activities. For example, the Chernivtsi Regional Prosecutor’s Office has already entered information into the URPTI under No. 42024260000000201 under Part H of Art. 365 of the Criminal Code of Ukraine, and the Ivano-Frankivsk Regional Department of the National Police in Ivano-Frankivsk Oblast – under No. 12024091010003168 under Part 2 of Art. 190 of the Criminal Code of Ukraine.

Avic – smuggling and non-transparent financial activities

The Avic network actively uses two main schemes for tax evasion: smuggling of equipment and processing of cash and cryptocurrency payments without accounting.

The Avic trademark belongs to a private entrepreneur, Dmytro Butenko. And in the public offer for the online store “AVIC.ua”, the seller is Butenko Dmytro Ihorovych. By the way, Butenko is a deputy of the Kharkiv City Council from the Servant of the People party. In 2019, he ran for the 9th parliamentary district from the “Shariy Party” of the propagandist of the same name. That is, now Butenko combines entrepreneurial smuggling activities with being a member of parliament.

Just like in previous cases, Apple equipment, including iPhones and other gadgets, is smuggled in violation of customs laws. In 2023, 250 thousand iPhones were officially registered in Ukraine, but 940 thousand were registered in the customs system – where did these additional 700 thousand gadgets come from?

In Avic’s offline stores, some goods are sold without fixation through cash registers and cash registers, and the funds received are not included in the reporting. When placing an order and paying in cryptocurrency, a specific crypto wallet is offered. In particular, three different cryptocurrency wallets were offered during three attempts to pay in cryptocurrency for goods in the Avic store: TALhZoiLybpbxcoydHxovF4fiziTKTmvBm; TERZVHe1QVxHQoWP7TM8KvmZLvbQebcVo5; TTA1KSyMhn7TeatV9Q9QgJ3hp7HSVppgXJ.

Avic’s total annual turnover from online sales alone is about $8.65 million, and another $10 million from offline stores. At the same time, no real taxes are paid, and the company continues to operate by evading financial obligations.

Of course, we did not ignore the illegal operation of the store, so based on our materials, the Prosecutor General’s Office is now investigating in a number of proceedings: Nº 42024000000001237 under part 3 of Art. 201-3 of the Criminal Code of Ukraine, Nº 42024000000001238 under part. 3 Art. 212 of the Criminal Code of Ukraine, Nº 42024000000001239 under part. 3 Art. 209 of the Criminal Code of Ukraine.

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