Ukraine’s economy operates notoriously in the shadows: people get paid under the table and sell goods under the counter. Overall, tax evasion may cost the country $30 billion a year.

Last year, Ukraine’s parliament made a step to fix one of these problems. It passed a bill to oblige more small businesses to use cash registers starting in January 2022 and make sure all pay a goods tax.

Thousands of individual entrepreneurs, however, have rallied against the change. They say the machines will burden small- and medium-sized business, which is already disadvantaged against large enterprises.

Family businesses can’t buy goods in discounted batches like large shop chains can, can’t afford accountants and aren’t as protected against corrupt tax officials — many don’t have lawyers.


During the protests in Kyiv, some individual entrepreneurs threatened they would close their businesses or stop working legally if the parliament didn’t recall the bill on cash registers.

“I want to rip apart my certificate of an individual entrepreneur and work illegally because it’s less expensive and less stressful,” said Sergii Dorotych, head of the movement of individual entrepreneurs.

“The laws about cash registers are advocated by the owners of big corporations and shopping malls in the parliament… They are leaving Ukrainian private entrepreneurs without means of living,” he said.

What supporters say

There’s only one way to know for sure that a local shop pays taxes on goods — a fiscal receipt.

When a customer buys groceries and receives a fiscal receipt, the shop uses a cash register and pays all the taxes.

Apart from the list of goods and prices for them, each receipt contains information about the company, date of purchase, payment method, and the amount of money retailer will pay in value-added tax.

Cash registers print out receipts for customers, while also saving information about each transaction for its retailers. This information is used for tax reports.


Enterprises without cash registers can give their customers only non-fiscal receipts, usually a piece of paper with a list of goods, price and the store’s stamp.

Although both receipts look similar, they have a different value for the Ukrainian business and the economy.

Businesses with cash registers cannot hide their income because it is recorded daily. Local tax service can check the reports any time and fine entrepreneurs even for a small oversight.

Such businesses cannot sell smuggled goods — unregistered goods won’t have a Ukrainian barcode or an identification number and thus can’t be sold through cash registers.

Cash registers are already mandatory for some small and medium-sized businesses in Ukraine, including pharmacies, jewelry stores and electronics stores.

According to Danylo Hetmantsev, a lawmaker who lobbied the law on cash registers, these businesses are “risky”, because they are more likely to sell goods under the counter and evade taxes.

For individual entrepreneurs who run cafes, hotels, local stores and travel agencies, in turn, cash registers aren’t obligatory today, given they earn less than $47,000 a year. But Hetmantsev says they exploit the system — underreport earnings to continue working without cash registers and evade the goods and services tax.


Local businesses without cash registers have fewer liabilities: they can hide their actual income and pay a smaller amount of taxes.

Non-fiscal receipts issued by these businesses do not protect customers from buying counterfeit goods and give no warranties — with a non-fiscal receipt, it is almost impossible to claim back the money paid for goods, because it doesn’t confirm the payment.

According to Viktoriia Kulykova, an expert from the European Business Association in Ukraine, nearly 30% of the household goods and electronics in Ukraine are sold illegally and go untaxed.

To change that, all businesses have to use cash registers and give customers fiscal receipts, Kulykova says.

What opponents say

Some experts believe that mandatory-for-all cash registers will hamper the work of small and medium-sized businesses.

Businesses should pay $300 for one cash register and invest nearly $200 annually to maintain it. Some companies also have to hire an accountant to keep submit financial reports.

According to Ukrainian economist Volodymyr Dubrovsky, small businesses can lose nearly $355 million when cash registers become mandatory for everybody. Some entrepreneurs, he believes, will stop declaring taxes at all, increasing the share of the shadow economy in the country.


Cash registers require constant communication with tax service officials, which may also increase corruption risks, according to Dubrovsky.

Many private entrepreneurs now use the simplified tax regime that provides simpler accounting and reporting, but with cash registers, there will be more nuances and they can be checked more frequently.

Elena Eremenko, head of Porada, a nonprofit that lobbies the interests of local businesses, also believes that cash registers won’t help against tax evasion and smuggling.

According to her, the Ukrainian customs service should first look for illegal imports at the border checkpoints. The percentage of smuggled goods sold by medium-sized retailers is tiny anyway, Eremenko said.

Controversial alternative

To make expensive cash registers more popular, Ukraine’s tax service has created a digital alternative that businesses can use for free.

Cashiers can install electronic cash registers on the laptop or smartphone that can access the internet. But apart from the software, businesses need a printer and paper to print fiscal receipts. One such printer costs up to $300.

From August to December, Ukrainians have registered nearly 60,000 electronic cash registers, according to Hetmantsev from the tax committee. And many businesses started to develop their own software that works better than the state services.

For example, the company Poster has launched an electronic cash register designed for cafes and restaurants. To use it, businesses should pay $17 per month. Ukrainian retailers, online shops and delivery services can use Smart Kassa app that is available for free.


Although Hetmantsev claims that electronic cash registers are quick, cheap and simple to use, many individual entrepreneurs have criticized them.

Dorotych said that the free app developed by the tax service works improperly and businesses still need to buy computers or phones to install it on. Many entrepreneurs also complain that electronic cash registers don’t work without an internet connection that is still a common problem in Ukraine’s rural areas.

Experts from the European Business Association disagree. They said that many electronic cash registers can work offline and send information about the transactions to tax service when the internet access is renewed.

“Electronic cash registers work automatically around the clock,” according to a statement by the EBA. Besides, “there is no need to train cashiers and monitor how they work.”

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