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You're reading: How Ukraine misses out on billions in tax revenue
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Citing analysis of customs declarations, Oleksandr Klymenko, head of Ukraine’s State Tax Service, said nearly $25 billion in profits are stashed abroad annually in tax havens by export-oriented businesses using transfer pricing schemes. Closing such schemes would alone noticeably close the nation’s tax gap of uncollected revenue, which was estimated by Korrespondent magazine to be $44 billion in 2011.

“Fifty two percent of exported Ukrainian goods are supplied through third parties (middleman companies), of which, 13.8 percent go through offshore zones,” Kommersant business daily quoted Klymenko as saying. “In metallurgy alone more than 75 percent of the volume of operations for black metals goes through third parties. Some $8 billion went through third parties.”

Klymenko added that the largest user of third parties is the grain market where 98 percent of export operations, or more than $3 billion worth of transactions are conducted using third parties, often times with companies that are connected to each other. 

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