How the new tax policy affects business: Nina Yuzhanina on the situation in the Internet services market

In the conditions of war, Ukrainian business is under double pressure: on the one hand — objective challenges of economic instability, on the other — actions of the authorities, which often create additional difficulties. The tax policy of the state, which should stimulate the development of small entrepreneurship in the difficult conditions of the war economy, is increasingly causing the indignation of entrepreneurs. This problem was especially acute in the field of fixed Internet. The latest actions of the authorities and tax authorities, which are officially called “detinization of the market”, in practice gave a result that, as emphasizes people’s deputy of Ukraine, tax and customs expert Nina Yuzhanina, has little to do with real business legalization processes.

The People’s Deputy of Ukraine emphasized that the other day there was an official statement about an increase in tax payments by almost 50% in the market of Internet services, which was presented as a success of detinization. But when you look at the actual numbers, the real picture looks quite different. Yuzhanina noted that just the day before she wrote about how the actions of the authorities had negative consequences for the fixed Internet industry, the results of work in the fourth quarter of 2024 clearly demonstrated this negative dynamic.

She emphasized that market revenues have fallen by 30%, while market concentration has only increased: the share of the top 10 companies already accounts for 30.15% of all revenues in the sector. At the same time, the number of users decreased by 3.5%, and more than 40% of companies that previously reported income lost their subscribers. These figures indicate the worsening of the crisis, not its overcoming.

In her opinion, there is nothing surprising in who announced the news about the “success of detinization” – the head of the tax committee did it. If this policy continues, there will be no place for small businesses in this country. The state actually devalues ​​the flexible possibilities of small business, which the country especially needs in wartime, and deliberately destroys these enterprises in favor of monopolists. And then he also manipulates official statistics, playing on the topic of tax increases.

Yuzhanina stressed that she is not going to repeat everything that has already been said more than once about the situation in the industry itself, but wants to focus on the main thing – the disdainful attitude of the authorities towards small business. She drew attention to the fact that only a person who has never built a business on his own, but used the opportunities created by others, can allow himself to publicly state that entrepreneurs “should spend less on lawyers, courts and petty deputies – and more on taxes and support of the army.”

Turning to the analysis of the “confirmations” of detinization provided by the authorities, Yuzhanina explained in detail what actually happened. According to her, the first is the increase in wages. But it did not happen due to the emergence of salaries from the shadows, but due to a change in the terms of the reservation of employees. To book an employee, the salary must be at least 20 thousand hryvnias and be kept at this level permanently. That is why incomes from personal income tax and military levy automatically increased when salaries increased. In addition, Yuzhanina reminded, at the end of 2024 the rate of the military levy was increased from 1.5% to 5%.

The second reason for the increase in tax revenues was the increase in prices in the industry for end consumers. As Yuzhanina emphasized, according to official statistics, for January-May 2025, compared to the same period of 2024, inflation in the field of communication amounted to 18.9%. Although individual figures for Internet services were not made public, the general trend of rising prices is obvious. And with price increases, VAT amounts automatically increase.

Nina Yuzhanina drew attention to the fact that even if one does not go into an even deeper analysis of details, the question arises: where is the detinization in all this? According to her, it is actually about the illegal deprivation of Internet providers of the right to work under the simplified taxation system (SSO), and not about the real legalization of the market.

She also analyzed in detail the authorities’ claims about the market’s revenues. Yuzhanina provided official data from the dashboard of the National Commission for Electronic Communications (NCEC) regarding revenues in the field of fixed Internet:

• for the first quarter of 2024, revenues amounted to UAH 5.3 billion;
• for the second quarter — UAH 11.1 billion cumulatively, that is, for the quarter — UAH 5.8 billion;
• for the third quarter — UAH 17.3 billion cumulatively, that is, for the quarter — UAH 6.2 billion;
• for the fourth quarter — UAH 21.6 billion cumulatively, that is, for the quarter — UAH 4.3 billion.

Yuzhanina emphasized that these figures clearly show the drop in income in the fourth quarter: from UAH 6.2 billion to UAH 4.3 billion per quarter. She emphasized that this fall is obvious and actually refutes all manipulations regarding the growth of the market.

Thus, as Yuzhanina noted, the authorities actually changed the economic reality — instead of detinization, in practice there is a drop in income, a reduction in the number of users, the disappearance of part of the enterprises from the market, strengthening of monopolization and an artificial increase in tax revenues due to changes in rates and prices.

Nina Yuzhanina expressed her personal opinion, which may not coincide with the editorial position.