Jewelry Chains Ready to Abandon Business Fragmentation After Dialogue with Tax Service

Two major jewelry store chains have recently confirmed their willingness to abandon the practice of business fragmentation, which became possible due to constructive dialogue with representatives from the State Tax Service of Ukraine. This announcement was made by Acting Head of the State Tax Service, Lesya Karnaukh, on her Facebook page.

"Recently, we met with representatives of two large jewelry store chains. During inspections, signs of tax obligation minimization through business fragmentation were identified. We agreed that these chains would abandon fragmentation, operate through a single legal entity — a VAT payer, regulate salary issues, and fiscalize all payment transactions," Karnaukh stated.

She also reminded that at the beginning of March this year, the State Tax Service held a broad meeting with representatives of the retail jewelry trade, during which current taxation issues in this sector were discussed.

According to Karnaukh, signs of tax obligation minimization through business fragmentation had previously been identified in the mentioned jewelry store chains. Specifically, in 253 stores, at least 100 individual entrepreneurs were simultaneously conducting business under a simplified taxation system.

"In fact, there are all signs of a single business — common infrastructure, suppliers, personnel, identical prices, and brands. These chains have repeatedly come under the scrutiny of tax authorities. Between 2025 and 2026, the State Tax Service conducted over 50 actual inspections, identified violations, and fines reached almost 70 million UAH. The violations were typical: selling goods without using cash registers; improper accounting of inventory; employing unregistered labor; conducting transactions using non-cash forms of payment (gift certificates) by single tax payers," the Acting Head of the Tax Service reported.

Karnaukh also drew attention to the practice of paying salaries "in envelopes," where on paper, employees received 8,000-9,000 UAH, while in job advertisements, the company sought specialists with salaries ranging from 20,000 to 40,000 UAH.

"We see the schemes for tax minimization. But our task is not just to document them. Through dialogue, we give businesses the opportunity to voluntarily change their operational approaches. We are consistently moving towards a tax compliance model, where the priority is to prevent violations. In case of ignoring agreements, our reaction will be appropriate," Karnaukh added.

She expressed hope that other representatives of the jewelry market would also enhance measures to reduce the shadow economy, which would contribute to improving the taxation situation in this sector.

It is worth noting that earlier, the Tax Service explained what constitutes business fragmentation, which is an important aspect for entrepreneurs to understand the legislative requirements.