What the State Tax Service found
The State Tax Service reports suspicion that about a third of businesses in the jewelry market do not show their real turnover. According to the STS, last year roughly a third of entities declared revenues of up to 100,000 UAH per month — an amount that in practice does not cover basic business costs.
More than 2,100 economic operators work in the retail jewelry market, and almost 95% of them are sole proprietors (FOP) on the simplified tax system. This structure makes the sector vulnerable to evasion schemes and "splitting" practices.
What the Tax Service says
"Despite some positives, the STS analysis showed that part of the business operators declare very low turnover. Last year a third of entrepreneurs reported revenues of up to 100,000 UAH per month. But in practice this does not even cover basic business expenses — wages, rent, purchase of goods and taxes. Therefore, it is evident there is understatement of sales volumes and incomplete recording of transactions through RRO/PRRO (cash registers / software cash register solutions),"
— Lesya Karnauch, Acting Head of the State Tax Service
Why the numbers don't add up
One simple logic: if official revenues do not cover salaries, rent and purchases, then part of sales are either not recorded or split among several registrations (the practice of "splitting"). An example from inspections is a brand that operated through 18 registered FOPs.
Layered on top are systemic problems: the effects of shelling, power supply issues, staff shortages, pressure from imports and currency instability. According to market participants (LIGA.net), demand for jewelry has not yet returned to pre-war levels — a drop in demand of 15–20% and a market contraction in 2025 of roughly 10%.
An additional factor is fluctuations in raw material prices: the price of gold at the start of 2026 rose above $5,000 per ounce, complicating cost calculations and encouraging ways to reduce tax burdens.
Consequences for the market and the state
Evasion and the shadow portion of sales mean three key risks: lost tax revenue for the budget, unequal conditions for those operating legally, and market instability that deters investors and slows the sector's recovery.
For employees it is also an issue: official wages in the sector are reported at 8–9 thousand UAH, while actual payments, according to the STS, are 2–3 times higher. Illegal schemes reduce social benefits and worker protection.
What can be done
Analysts and tax officials propose combining strict control with technical solutions and incentives for legal trade: targeted audits in high-risk areas, combating splitting, simplifying RRO/PRRO operations and digitizing accounting, as well as supporting Ukrainian manufacturers in promoting their products on the domestic market.
Conclusion
The problem is not only the numbers on paper. It's a matter of trust — between business and the state, between seller and buyer. If declarations do not turn into real actions (more accurate reporting, effective control tools and support for legal producers), markets will recover more slowly, and losses to the budget and social protection will grow. Whether this will become a reason for a systemic cleansing of the market depends on the speed and coordination of decisions by authorities and business.
