Hetmantsev has once again raised the issue of businesses evading taxes, focusing this time on the coffee sector. He estimates budget losses from coffee smuggling at over UAH 1 billion per year and calls on fiscal authorities and BEB to step up control.
Such appeals have been made for years regarding various industries—from tobacco and fuel to electronics and dairy—always followed by increased inspections and pressure, but not by a reduction in the shadow economy. According to Hetmantsev, a third of coffee imports enter Ukraine illicitly. The main schemes are declaring coffee as chicory, with suspiciously increased chicory imports in recent years, or bringing coffee in undeclared. The Kyiv and Lviv customs offices lead in such operations.
To sell smuggled coffee, large retail chains split their operations into dozens of sole proprietors, minimizing taxes. Market oversight is minimal. The sector reports only about 1.5% VAT payment and less than 1% profit tax. The average salary is UAH 13,000, and 90% of businesses pay below market rates, often supplementing incomes with off-the-books cash.
Besides smuggling, counterfeiting is an issue: cheap raw materials are packaged as known brands, harming consumers and legitimate importers. The total annual loss to the budget from the shadow coffee market exceeds UAH 1 billion.
Despite tighter controls, the shadow economy persists. Inspections in Ukraine are often conducted under a presumption of guilt. Only 4% of additional assessed payments after audits are actually collected; the rest are challenged or not paid.
The core problem is not control, but the system itself: high taxes, complex rules, unstable legislation, and business risks. As a result, entrepreneurs turn to grey schemes. According to the investigation's author, rather than pressure, reforms are needed: simpler taxation and a presumption of good faith.
Coffee smuggling is a symptom of systemic problems. Solving it requires a change of rules, for which the Verkhovna Rada, government, and relevant committees are responsible.
