The Economic Security Bureau of Ukraine conducted searches at one of the country's largest second-hand store networks. The network includes 200 retail outlets, but legally exists as a conglomerate of 530 individual entrepreneurs — each formally operating as a separate business entity.

According to the ESB, the business owner resides in China.

How the scheme works

Splitting a single business into hundreds of individual entrepreneurs is a well-known tax scheme. Each separate entrepreneur remains within the simplified taxation system and does not cross the thresholds that would force transition to the general system and VAT payments. In aggregate, the network generates turnover incompatible with preferential unified tax rates, but each "cell" of the scheme appears legitimate.

Under such a structure, centralized management — a single brand, unified logistics, uniform pricing policy — is combined with tax fragmentation. Real control over all 530 individual entrepreneurs is concentrated in one person's hands, while fiscal responsibility is dispersed.

What was sought during the searches

The ESB has not disclosed the full list of suspicions. The standard logic of such proceedings involves establishing a single actual management center, documents on coordination of individual entrepreneurs' activities, financial flows between them, and discrepancies between declared income and actual trading scale.

The second-hand market in Ukraine is not a marginal segment. After 2022, demand for used clothing increased significantly: according to market participants' estimates, the industry turns over billions of hryvnias annually. A network of two hundred stores in this context represents a serious player with corresponding turnovers.

Owner abroad — an additional dimension

The fact that the beneficial owner is in China complicates both the investigation and potential recovery of unpaid taxes. Without international cooperation and assets registered in Ukraine, even a proven scheme may end with a verdict without actual restitution.

The ESB has not yet announced suspicions against specific individuals. The searches represent evidence gathering, not the conclusion of the investigation.

If the investigation proves unified management of all 530 individual entrepreneurs, a question arises that extends beyond this case: is current legislation sufficient to qualify artificial business fragmentation as tax evasion — or will each entrepreneur continue to be held responsible only for themselves?