A large-scale “business fragmentation” scheme was discovered in Odessa: tax evasion of over UAH 11 million

Law enforcement officers in Odessa have exposed a businessman who organized a tax evasion scheme by “splitting” his business activities. According to information, detectives from the Territorial Department of the Bureau of Economic Security discovered that the businessman created a network of controlled individual entrepreneurs to reduce the tax burden and hide the real amounts of income from the sale of flowers.

During the investigation, it turned out that in order to maintain a simplified taxation system and show understated income, the organizer registered his relatives and acquaintances as separate individual entrepreneurs. In fact, all processes were controlled by one person, and the activities functioned as a single system.

The businessman’s office was located in the center of Odessa, and the products were sold through retail outlets in Kyiv and Odessa. More than 60 people participated in the scheme, some of whom were formally considered entrepreneurs. Payments for products were made without using payment transaction registrars and were made to the accounts of more than 30 controlled individual entrepreneurs. This made it possible to hide the real sales volumes and avoid paying more than 10 million UAH in taxes.

During the searches, law enforcement officers seized accounting documentation, work books, cash in the amount of 511 thousand UAH, draft records, seals, as well as almost 91 thousand flowers. The total value of the seized property exceeds 10.5 million UAH.

The organizer of the case has already been charged under Article 212 of the Criminal Code of Ukraine for intentional tax evasion. The indictment has now been sent to court.

During the investigation, 10.6 million UAH was reimbursed to the state budget, another 1 million UAH will be used to support the Armed Forces of Ukraine. Law enforcement officers have completed the liquidation of the “business fragmentation” scheme, and the entrepreneur has pledged to comply with the law in his activities.

Control over tax revenues will be carried out by analysts of the Bureau of Economic Security in order to prevent new violations in this area.

In addition, it is reported that in the Lviv region, detectives of the Bureau also referred to court the case of two heads of private enterprises, who are suspected of embezzling budget funds during the reconstruction of energy infrastructure.