In Ukraine, the shadow fuel market halved: the reasons became known

Against the background of Russia’s full-scale invasion of Ukraine, the shadow fuel market has shrunk by almost 50%. The main reason for this was the destruction caused by Russian shelling. This was announced by the director of the A-95 Consulting Group, Serhiy Kuyun, during a briefing at the Ukraine Media Center. informs liga.net.

According to Kuyun, the shrinking of the shadow fuel market was not due to increased control by tax authorities or changes in legislation, but due to the destruction caused by Russian shelling.

“This market has shrunk due to unexpected factors – this is not the work of tax officials, law enforcement officers or the regulatory framework, but the result of the destruction of these small industries by the Russians”, – explained Kuyun.

In particular, about half of the mini-oil refineries (mini-refineries), of which there were approximately 20 by 2022, were destroyed. As an example, Kuyun cited the recent destruction of one such plant in the Poltava region in early June, where nothing remained of the facility . In addition, the existing mini-refineries face problems with the supply of raw materials.

As a result, the share of production at such factories decreased from 25-30% to less than 10% of the market. For comparison, in 2020, Ukraine operated from 24 to 30 mini-refineries, which were mostly located near oil fields in the Kharkiv and Poltava regions.

Kuyun also noted that the activities of many such factories were often conducted in the shadow sector of the economy, avoiding paying taxes. According to estimates, in 2020, because of this, the state did not receive about 3.7 billion hryvnias per year.

Oleksandr Sirenko, an analyst of the “Naftorynok” profile publication, noted that the reduction in value-added tax rates on fuel made tax credit trading scams unprofitable, the volume of which in 2021 was estimated at 10 billion hryvnias.