Ukrainian businesses pay not only taxes but also a hidden “administrative tax”: they spend time and money on bookkeeping, reporting, documenting transactions, undergoing audits, unblocking VAT invoices, and appealing decisions by the tax authorities.
In a column for Business Censor, Oleg Getman, Coordinator of the Economic Expert Platform and Associate Expert at CASE Ukraine, explains where the greatest costs arise and how they can be reduced without weakening tax control.
According to a 2025 CASE Ukraine study, companies operating under the general taxation system with VAT spent an average of 478.2 person-days per year on accounting and tax compliance. For businesses using the simplified taxation system without VAT, the figure was 114.5 person-days. This demonstrates how strongly the complexity of a tax regime affects the administrative burden.
The suspension of VAT invoices remains a separate concern. In 2025, the State Tax Service suspended the registration of 1.14 million VAT invoices and adjustment calculations. Businesses had to prepare explanations, repeatedly collect supporting documents, and seek the restoration of registration. During the same year, the tax authorities completed more than 53,000 audits, received almost 50,000 complaints, while 71,800 cases involving the State Tax Service were pending before the courts.
Most resources are consumed by documenting business transactions, maintaining records, communicating with the tax authorities, preparing reports, making payments, and filing appeals. Digitalisation does not solve the problem if electronic services merely reproduce paper-based bureaucracy and require businesses to resubmit information already held by the state.
By 2029, the EU plans to reduce the administrative burden on companies by at least 25%, and by 35% for small and medium-sized enterprises. Ukraine also needs measurable targets: a reduction of at least 30% overall and 40% for SMEs.
Key measures should include an audit of all tax procedures, reform of VAT administration and the VAT invoice risk-monitoring system, automatic unblocking of most invoices after 30 days, reuse of previously submitted data, pre-filled tax returns, and risk-based audits. Technical errors that cause no revenue loss should be correctable without disproportionate penalties.
The success of the reform should be measured not by the number of new digital services but by how much working time businesses actually save. Lower tax compliance costs would allow companies to direct more resources towards investment, production, and job creation.