Comparative Analysis of the Fiscal Impact of the Use of Tax Evasion and Tax Avoidance Instruments in Ukraine

A new study by CASE Ukraine, ISET and the Economic Expert Platform moves beyond broad shadow-economy estimates and offers a comparative assessment of the country’s largest tax evasion and tax avoidance schemes — precisely where the biggest fiscal losses occur and where policy action could deliver the strongest payoff. A key message of the report is that, in Ukraine’s case, the main losses stem not so much from small-scale informality as from large, sophisticated schemes that distort competition and thrive on weak institutions.

Among the study’s main findings is an estimate of the largest direct budget losses in 2024. The biggest losses are linked to violations of customs rules, smuggling and corruption at the border, estimated at UAH 105-120 billion. Another UAH 39-43 billion is associated with counterfeiting and illegal trade in excisable goods, while UAH 38-48 billion is linked to fictitious entrepreneurship, including carousel fraud, code substitution and “drops.” At the same time, the authors stress that some schemes overlap, which means total losses are somewhat lower than the simple arithmetic sum of all estimates.

One of the report’s most important conclusions is that abuses of the simplified taxation system, while widespread, are still an order of magnitude smaller in fiscal impact than the top-tier schemes. This leads to a broader policy implication: meaningful de-shadowing will not come from putting more pressure on microbusinesses, but from rebooting tax and customs administration, eliminating conversion centres, and improving enforcement capacity.