Business in despair, mechanisms for compensating losses must be sought: interview with Hetmantsev

Russian strikes have caused business losses worth billions of hryvnias. What will the state’s response be? Ukrainian companies’ losses from Russian shelling are measured in billions of hryvnias, and ahead lies another harsh winter and energy challenges. Business expects financial support from the state through concessional loans and tax holidays. Chairman of the Verkhovna Rada Financial Committee Danylo Hetmantsev told RBC-Ukraine about possible steps to support business, as well as about the cancellation of preferential treatment for Chinese parcels, taxes for individual entrepreneurs (FOPs), priorities of the new Cabinet, and his conflict with Mykhailo Fedorov. The text has been edited and shortened for convenience. See the full interview on RBC-Ukraine’s YouTube channel.

Key points: Scale of losses and new benefits: due to significant destruction of warehouses, the government is preparing to expand the program 5-7-9% and to raise limits on war-risk insurance. Budget reallocation and abandonment of the National Cashback: funding for new benefits should come from closing ineffective programs (including the National Cashback). Taxation of parcels: canceling privileges for Chinese parcels is a necessary measure to protect the Ukrainian market. Taxes for FOPs: systemic changes to the single tax and VAT for FOPs should be postponed until the end of the war. Pension reform and the funded tier: the government is preparing a reform involving money from funded pension funds for a 25-year construction program of 1 million apartments. Fight against the shadow economy: bringing even one-third of the 1 trillion hryvnias of the shadow sector into the light would allow the budget to attract up to 150 billion hryvnias more per year.

Attacks on business, entrepreneurs’ despair, and support measures – We meet amid Russian attacks on Ukrainian business. Hubs and logistics warehouses of major retail brands are being destroyed. You held a large meeting with business in the committee. What was discussed? – The situation is extremely difficult. I have not seen the business this desperate at any time during the war. Rozetka lost 70 million dollars — and that is money taken out of circulation that simply cannot be recovered... Epicenter lost its central, most modern plant in Europe, which will certainly not be restored now... And these are companies with workforces of 40-50 thousand people. We often say Epicenter is Hereta’s, but in fact it’s 40 thousand workers who make this large, white business. These are Ukrainian brands known worldwide: Nova Poshta, Rozetka, Silpo, ATB. Around each of them is a huge ecosystem of thousands of small and medium enterprises that serve them. With shelling, the Russians literally ripped financial blood from this ecosystem. Losses for each such entity are measured in billions, and companies are on the verge of stopping operations.

– Existing government programs are mainly designed for small and medium business. Is there a plan to involve large players? – The state is limited in resources: if we immediately opened programs to large business, small and medium enterprises would be left without money. However, large business is now asking to expand these instruments, and I fully agree with them. Business needs two things. First — cheap loans. The banking system is not providing cheap money now. The 5-7-9% program only partially compensates interest, but banks, when arbitraging income, prefer risk-free placements in NBU deposit certificates and government securities. They earn interest with no risk instead of lending to the real sector. Another issue is portfolio guarantees. Enterprises have lost property that could be pledged as collateral. Therefore the state must act as guarantor of loan repayment via state guarantees. We have already discussed expanding the 5-7-9% program with the prime minister and the economy minister. The NBU has removed itself from this problem — they are fine and report growth in lending. But business looks at these reports and does not understand which money is being discussed. The needs of Epicenter, Nova Poshta, and others are measured in billions. They are ready to take those billions from the banking system at an acceptable rate. The state cannot fully compensate businesses’ losses — we don’t have such funds; direct losses alone amount to roughly Ukraine’s annual GDP. But the state is obliged to subsidize part of the interest rate and provide guarantees.

Photo: Danylo Hetmantsev (RBC-Ukraine)

– You mentioned banks’ risk-free profits. Is that why you supported raising taxation on the banking sector? – I consider it an anomaly when the banking sector earns excessive profits during the war precisely because the war is ongoing and the NBU is using tools to curb inflation. Such an anomaly requires a government response. Similar examples existed in the U.S. during World War II when a tax on excess profits was introduced. We implemented this in Ukraine — we have three years of the tax in operation, excellent budget revenues, and no negative impact on banking stability.

– What about war-risk insurance? – This is the painful problem number two. I demanded the launch of this program for three years under three different governments. It started this year, but very conditionally. Via the Export–Credit Agency (ECA), there are as many as 400 applications from businesses in frontline territories. That’s negligible. Why isn’t the program operating at full capacity? Because there is an indemnity limit — up to 30 million hryvnias. For large chains this amount is too small, although small businesses could be more active. The insurance program needs to be expanded. If only 1 billion hryvnias are currently allocated, this amount should be increased by 10-30 times — to 10-30 billion hryvnias. We expect proposals from the Ministry of Economy, and I am convinced parliament will support this, even if additional funds are needed. Limits under these programs must be significantly increased for everyone.

Efficiency of expenditures, tax holidays, and logistics problems – Increasing 5-7-9% and expanding insurance require tens of billions. Where to get these funds given the severe deficit? – Through reallocation of ineffective programs. We have up to 50 billion hryvnias in the budget for programs that the government effectively does not use. In some cases, for every fifth program, implementing agencies cannot even complete the procedure and approve a budget program passport with the Ministry of Finance during the entire first quarter! Funds are allocated, but they just hang unused. This is a huge efficiency problem. Another example is the National Cashback. Business views this differently, but I spoke with specific entrepreneurs who say plainly: we don’t need this cashback; better expand 5-7-9%.

– Former economy minister Oleksiy Sobolev argued in favor of the National Cashback… – The numbers show the opposite: the effect on GDP growth from the cashback is 0,10% — within statistical error. It was a populist mistake that should be abandoned and the funds directed to financing 5-7-9%.

– Hurt businesses raise the issue of tax holidays. Are you considering this option? – Taxes are levied on profit or on the tax base. If the tax base is destroyed, the tax does not arise anyway. But general tax holidays for all businesses are impossible, because then we would have to disband the army, which is financed exclusively from our internal taxes. For businesses that were truly harmed by shelling, the law already contains several effective mechanisms. First is Article 100 of the Tax Code: installment plans or deferral of tax obligations by decision of the Minister of Finance (possibly even beyond one budget period). The Ministry of Finance is willing to accommodate Rozetka and other companies. Second is the force majeure provision: exemption from fulfilling tax obligations due to impossibility. We adopted this back in 2022, and 11 thousand enterprises have already used this instrument. This decision is applied by the Tax Service.

Photo: Danylo Hetmantsev (RBC-Ukraine)

– Besides finances, what nonfinancial barriers has retail faced? – Two main problems now. First — warehouse premises. Warehouse owners fear strikes and don’t want to lease to retail chains, and current landlords are demanding eviction. This is business pragmatism, so the state must offer alternative sites. Second — reserving workers. Dispersing warehouse hubs requires heavy manual male labor — women simply can’t do this. Entrepreneurs ask that this specific factor be considered when assigning reservations.

Winter outlook, assessment of the enemy, and funded pension reform – Another major attack on the energy sector and a harsh winter are ahead. What scenarios do you see? – GDP decline in the first quarter, fuel problems from April, logistics difficulties, blocking of maritime transport, and to that have been added targeted strikes on the largest and most efficient private enterprises. The situation is worse now than at the beginning of 2022, when business had resources and was not so damaged. At the start of the full-scale invasion there was paralysis and bewilderment, but the economy was intact and had financial reserves. Now we have huge infrastructure losses, destroyed warehouses, a logistics collapse, and a fuel crisis dependent on world prices. Recovering under constant shelling is extremely hard. I never belonged to the social-media experts who predicted a quick economic collapse of Russia. They have a powerful economy. They adapted it to wartime conditions, accelerated import substitution, and created an international network for bypassing sanctions. There is no reason to expect their economic collapse. This winter will be very hard for us. But we will hold on — we have no other alternative. However, we must understand: any of our government or grant programs are stopgap wartime measures. Without stable and long-term peace, no major investments will enter the country, no matter what investment or industrial parks we build. Peace is task number one.

– What does President Volodymyr Zelensky mean when he talks about forcing Russia to peace and steps inside the Russian Federation? Is that purely a military matter or a combination of factors? – It’s a combination: international influence, the military component, and negotiations. The president is determined to secure peace. The fact that the Russians don’t want it is true, hence his rhetoric about forcing them to peace.

– Will winter programs of one-off social payments that operated before remain in the budget? – I consider the fuel purchase assistance program absurd, and the National Cashback ineffective. That was a mistake that should be abandoned. There were also correct social measures. For example, payments of 1500 hryvnias to pensioners in winter — that was absolutely the right move. Half of Ukrainian pensioners receive sums that make survival impossible.

– What about the pension reform that has been discussed for decades? – Pension reform is task number one for the government. It is a popular reform for most citizens because its goal is to raise the minimum pension to 6-7 thousand hryvnias. That is a direct presidential task. It is unpopular only for those who will lose special pensions and clan privileges. The main problem of prior reform attempts over the last 15 years is their half-measures. They created a calculation formula where, through various tricks, a person loses up to 20% of their pension, and indexation is tied to the outdated base year 2017. We must link to average wage growth and reach a replacement ratio of at least 40% (meaning the percentage of the average wage that the pension replaces). Next should be the introduction of the funded tier. Working model: if an employee pays 1% of salary, the state adds 1% (together 2%); if 2% — the state adds 2% (together 4%). Nonstate pension funds must also receive clear guarantees protecting savings from inflation so these funds do not evaporate. A corresponding bill has been prepared. Long-term money from pension funds (for 20-30 years) will be directed to a program to build 1 million apartments. This will kick-start construction and allow teachers, medical workers, military personnel, and large families to obtain quality housing worth 30-50 thousand dollars with installments over 25 years at 3% annual interest. These are the funds we could invest by taking them from pension funds.

Photo: Danylo Hetmantsev (RBC-Ukraine)

Budget for next year, parcel taxation, and detaxification – How is the budget for next year formed and where to look for revenue sources to cover expenditures? – The main requirement for the new budget is to prepare it soberly. Previously figures were massaged to fit — underfunding the army was intentionally assumed to make numbers work for the IMF, and midyear the estimates were revised.

– What has changed so you can do things differently? – I constantly insist that the main source of internal resources is detaxification. More than a trillion hryvnias are in the shadows. If we bring even a third out of the shadows, the budget will receive an additional 150 billion hryvnias per year. Customs and NABU reforms have been adopted normatively; now the new competitive leadership must implement them in practice.

– Will changes be needed in the budget this year to find money for military pay? – Changes will be needed. We are repeating last year’s story. I am convinced we will find internal reserves. The initiative must come from the Ministry of Finance — they should propose reallocation within the budget. Defense expenditures will be fully financed.

– And for next year: what do we expect from partners and are there guarantees of funding? – We expect 45,3 billion dollars next year. That’s a huge sum. It is practically guaranteed, but we must fulfill our obligations under memorandums with the EU and the IMF. This is not coercion into something harmful — these are our internal reforms necessary for normal economic functioning. Take the high-profile issue of parcel taxation. I do not understand how, in a country at war for the fifth year, there can be a debate about taxing VAT on Chinese marketplace goods when this tax applies to bread, milk, and meat. Deputies say: it’s unpopular, people buy diapers for kids there. But by that logic let’s shut down domestic business! Our companies are already considering moving warehouses to Poland — notably Rozetka — to supply goods duty-free to Ukraine under the 150 euro exemption, without VAT. Then Ukrainian workers would lose their jobs entirely and have nothing to buy on those marketplaces. Populists who chase ratings do not understand: if we lose statehood due to such policy, they will compete for ratings somewhere in Krakow or Lisbon, as happened in 1919. We must carry out real EU-integration reforms and adopt necessary decisions. All business associations have written me letters supporting the parcel law.

– Taxation of digital platforms was a difficult issue. And VAT for FOPs is a taboo for many deputies… – Criticism of the digital platforms bill is pure populism. The whole business community supports it without exception! We agreed the wording, introduced a 2000 euro exemption for selling personal items, reduced the rate from 23% to 10%, and made the platform automatically withhold the tax. But deputies jump on the rostrum and scream about a tax on shoes or socks without even reading the document. Regarding VAT for FOPs: I promised not to change the single tax system until the end of the war and will keep that promise. However, after the war we cannot have a double VAT threshold (1 million hryvnias for all and 10 million for FOPs). Now retail chains fragment into 3,5 thousand FOPs because we ourselves created the conditions for that. The single tax should support small business by simplifying accounting and self-employment. But when it comes to an indirect tax (VAT) paid by consumers, creating different regimes within one country is not support for small business but a scheme for large business to evade taxation. This issue is postponed until April 2027.

– Media discuss raising single-tax rates for FOPs in next year’s budget. Could the Ministry of Finance do this due to lack of funds? – We currently have no commitments to raise taxes for FOPs. I do not see significant fiscal potential in raising the single tax — the sums are small. I am against any changes for simplified taxpayers until the end of the war. The main and most popular solution to replenish the budget is detaxification. Until we address the shadow economy, which amounts to half of GDP, any tax increase will be a penalty on honest white business. We cannot do that. First we must stop open trade in contraband in markets and pavilions.

Photo: Danylo Hetmantsev (RBC-Ukraine)

– Who covers this? Specific people or a system? – It’s a clan system. It works like this: at the middle levels of law enforcement, fiscal and customs authorities, strong horizontal corruption ties form. If someone is caught, they are simply replaced by another person. They can pause a scheme for a month, then resume shadow trade. The so-called shadow business is tightly linked to these ties and exploits them.

– Regarding detaxification. Tobacco manufacturers say the share of the illegal market has started to grow again, although it was falling in 2024. Why? – In 2024 the issue was tackled systemically, so the shadow share fell. Work has been relaxed now. BEB and the National Police shut down a factory in Chernivtsi and two other productions, but those are isolated actions. For some reason they do not notice the well-known Lviv Tobacco Factory, which I am the only one publicly talking about.

New Cabinet, scandals at the Ministry of Digital Transformation, and election prospects – How do you assess the new Cabinet headed by Serhiy Koretskyi? – This is the strongest financial-economic bloc of the government since 2019. I know Koretskyi from work at Ukrnafta: he came to the company burdened with huge tax debts that the previous management refused to pay, and in less than a year brought it to profit and paid off the debts. Economy Minister Oleksiy Kravchenko is an exceptionally professional person with whom we prepared the recovery plan in Lugano back in 2022: he did it from McKinsey and I from the National Recovery Council. He is a very skilled specialist. Officials work 24/7 and respond to challenges instantly.

– What was the essence of your public conflict with Mykhailo Fedorov and his deputy Oleksandr Bornyakov when they were at the Ministry of Digital Transformation? – This conflict has a concrete subtext in the areas I oversee as committee chair. Gambling and lotteries. The Ministry of Digital Transformation held a pseudo-competition for lottery licenses, giving potential participants only 29 days to collect documents. No international company entered; licenses were reassigned to existing monopolists. Second — launching the State online monitoring system for gambling was coordinated with the ministry for October 2025. When the deadline came, it turned out they hadn’t even announced a tender, and the budget for 2026 did not allocate funds for it. Because of the absence of the system, the state loses 20 billion hryvnias a year. Another issue is lack of sanctions. The regulator PlayCity under the ministry’s control did not issue any fines to operators for advertising on pirate and Russian sites. The prosecutor’s office has opened four criminal cases on these facts. Failure of e-Excise. The ministry was given 2,5 years to develop software for electronic excise on tobacco and alcohol. They missed all deadlines, did not draft bylaws, and then tried to blame business. The reform’s launch was postponed to July 2027, causing annual budget losses of 50 billion hryvnias. I voted for Fedorov’s appointment. But if a person allows systemic failures and covers schemes — I cannot stay silent just because an untouchable idol has been formed. Every state mistake has a name.

– You were also accused of trying to delegate your people to the PlayCity regulator... – That is an absolute lie. I officially state: I never asked or demanded from Fedorov any personnel decisions, except one — to fire officials who steal.

– Are elections in Ukraine possible in the near future and how do you see your political future? – I strongly want elections to take place. Society and parliament really need a reset. But holding elections during shelling, when part of the citizens are at the front and part are abroad, is technically and security-wise impossible. Elections should be held only after peace is achieved. But after elections there must be no questions about their legitimacy. Regarding my participation: I have not yet decided whether to continue my political career. My main mission, to which I have devoted many years, health and reputation, is to bring detaxification of the economy to full and irreversible victory. I will pursue that in any status — in power or outside it.