Back
Automatically translated version. May contain inaccuracies compared to the original.
How Russia is destroying Ukrainian business. The Epicenter case
According to Epicenter K co-founder Halyna Hereha, as a result of missile and Shahed drone attacks more than 30 of the company’s facilities have been completely destroyed or damaged. In total this is over a million square meters of retail, logistics, and production space. The company’s losses amount to more than 1 billion dollars.
“Just in the last month, when business has been hit especially hard, we lost 7000 jobs. For me this is the most painful issue. People are the most valuable thing each of us has,” said Halyna Hereha.
Photo: Zoryana Stelmakh
Halyna Hereha, co-owner and chief financial officer of the Epicenter K group of companies
The Epicenter co-founder notes that since the start of the war the company tried to handle the problems caused by the attacks on its own. But the systematic and large-scale bombings have led to the point where attacked Ukrainian businesses cannot quickly rebuild what they built over decades without state support.
“We put out fires because the State Emergency Service cannot work while there is a threat of shelling. After every strike we repair and restore something, we now have to look for money for firefighting equipment, for mobile shelters near every shopping center to protect employees and visitors…” — Halyna Hereha said.
According to statistics, more than 50% of warehouses in Ukraine have been destroyed to date. The total amount of business losses in 2026, according to the Ministry of Economy and Environment of Ukraine, is about 10 billion dollars.
Thus, Hereha emphasizes, businesses urgently need state support, long-term loans to rebuild and construct new logistics spaces, and insurance against war risks, which has been discussed for years.
Do Ukrainian banks have money to lend to business?
Is there enough liquidity in the Ukrainian banking system to cover the economy’s reconstruction needs? “No,” — stated First Deputy Governor of the National Bank of Ukraine Serhiy Nikolaychuk. That, he emphasizes, means the country needs various financing mechanisms.
Photo: Zoryana Stelmakh
Serhiy Nikolaychuk, First Deputy Governor of the NBU
As the First Deputy Governor of the National Bank noted, since the full-scale invasion one of the most popular lending programs became the state initiative “5-7-9” to support small and medium-sized businesses. In times when banks were cautious about war-related risks and uncertainty, it became an important boost to restore lending during the war.
In 23/24 that program became so popular that the state owed banks 10 billion hryvnias in interest compensations. Therefore, Nikolaychuk notes, in 25 it was targeted exclusively at problem zones that truly needed state support.
“Lending under the ‘5-7-9’ program slowed significantly, while hryvnia business loans outside that program grew by almost 50%,” a National Bank representative said. “But unfortunately, in 26 business faced a number of new problems. Russia reoriented its attacks largely toward the commercial sector, which accordingly required state support through various instruments. And the ‘5-7-9’ program became one of them. Now the growth rates of the loan portfolio within and outside the program have leveled out — plus or minus 34%, according to the latest data,” Serhiy Nikolaychuk said.
However, the need for long-term loans has also become acute for large damaged businesses that do not qualify for preferential state lending programs. They need large, long-term funds.
Nikolaychuk says the NBU’s initiative to build capital market infrastructure is aimed at creating a mechanism to attract funds from various investors via the capital market.
“When we talk about the banking business, our efforts are focused not only on helping the government calibrate business support programs under current conditions, but also on making the banking sector competitive and attractive to foreign capital, because we need to significantly increase the banking system’s capital to strengthen its ability to finance the economy,” Serhiy Nikolaychuk noted.
Photo: Zoryana Stelmakh
Serhiy Nikolaychuk, First Deputy Governor of the NBU
He adds that increasing the equivalence of Ukrainian banking regulatory legislation to European standards — from 50% in 22 to 82% according to the latest data — is one of the outcomes that make the Ukrainian market more attractive and sends positive signals to foreign investors about investing in the capital of Ukrainian banks.
“These are still small steps, but without them we are unlikely to achieve the result we need,” Nikolaychuk remarked.
However, he said, the only way international partners currently support Ukrainian bank lending is portfolio guarantees from the European Investment Bank, the EBRD, and some Ukraine Facility mechanisms. And European partners mostly work with banks that have international capital, so these programs need “calibration” to increase effectiveness.
Therefore, Ukrainian banks are currently the most accessible credit resource for business. But their ability to finance reconstruction can be significantly undermined by additional taxation of bank profits, Serhiy Nikolaychuk emphasizes.
Currently the corporate profit tax rate for the banking sector is 25% (which is higher than for other sectors that pay 18%). However, to fill the budget that rate for banks has already been increased three times to 50%.
“If this budget measure remains for 2027 year, it will effectively be the fourth increase in the rate. And such a step would be harmful to the banking sector,” the First Deputy Governor of the National Bank of Ukraine believes.
Photo: Zoryana Stelmakh
This view was supported by the head of the international business community Board, economics professor and founder of the Advanter Group companies Andriy Dligach. He believes that reinstating a 50-percent profit tax on banks contradicts the economic logic of rapid recovery.
“We can’t go that way. We looked at the multiplicative effect: if this money goes not through state budget financing of the deficit but returns to business — the efficiency for the state budget is 30% higher,” he emphasized.
Photo: Zoryana Stelmakh
Founder and CEO of the Advanter Group and the international business community Board Andriy Dligach
What does the state propose to business?
“These are difficult times for the Ukrainian economy and Ukrainian business. The Ministry of Economy estimates business losses in 2026 at approximately 10 billion dollars. Combined with closed ports, this is tremendous pressure on the Ukrainian economy.
So for the ministry the priority is supporting businesses that pay taxes, finance the Armed Forces, and provide each community with critical services and goods. Right now we are doing everything we can. In particular, we are expanding the war-risk insurance program for business and have included Kyiv and Kyiv region in the list of high-risk territories. We expanded the list of property (for damage or destruction of which a business can receive compensation),” said Minister of Economy and Environment Oleksandr Kravchenko.
He also noted that they managed to scale up preferential loans for large enterprises.
Photo: Zoryana Stelmakh
Oleksandr Kravchenko, Minister of Economy and Environment of Ukraine
“This is what we can give now. We understand it is not enough. It is incomparable to the challenges businesses now face. But our fiscal resources are very limited. (As People’s Deputy, Deputy Chair of the Verkhovna Rada Committee on Finance, Tax and Customs Policy Yaroslav Zheleznyak noted, over 8 months Ukraine has already lost 61 billion hryvnias in VAT; the Ministry of Finance expects tax service shortfalls to grow to 70 billion by year end. — Ed.).
That means we need to look for alternative, additional solutions,” the Minister of Economy and Environment said.
And one such solution, in Kravchenko’s view, could be a state-supported military insurance mechanism.
Talk of insuring war risks has been going on since 22. But this initiative has not been implemented on a large scale — Ukrainian insurance companies do not have enough capital to take on current risks. Insurance through MIGA (the Multilateral Investment Guarantee Agency of the World Bank — Ed.) was limited, if anything, to targeted implementations and recently, Kravchenko noted, has almost stopped working.
“I don’t see another option other than trying to launch a large-scale military insurance mechanism with state support. Again, for it to work at the scale of the challenges businesses now face and to signal to business that it is serious, we must capitalize it sufficiently,” the minister said.
To capitalize the fund, the state intends to increase VAT by 1 percentage point (this measure is already included in the draft budget for 2027 but has not yet been approved by the Verkhovna Rada — Ed.). The insurance premium for business is planned at 2% of asset value. The compensation for business would be up to 10 million dollars for the first loss from a Russian attack.
Photo: Zoryana Stelmakh
Oleksandr Kravchenko, Minister of Economy and Environment of Ukraine
“It seems to me we have a chance to mobilize sufficient capital. Secondly, I think this is a relatively efficient use of state funds, because we actually create a large lever for private and donor capital. The state provides some resources, which we leverage to attract donor financing.
2%, which we ask businesses to pay, is additional capitalization of this insurance fund from the purely private sector. In addition, the private insurance market comes in on top. After the state takes on the initial losses, the insurance market is ready, for adequate premiums, to insure the excess risk.
So with state funds we mobilize many variants of donor and private capital so that this total capital supports Ukrainian business and the Ukrainian economy. I believe this mechanism can work at a scale adequate to the current challenges. Will it be enough? No. But it can be a big victory for the Ukrainian economy,” Oleksandr Kravchenko explained.
However, a possible VAT increase of 1% sparked a heated discussion. The chamber included both supporters and critics of this approach.
Photo: Zoryana Stelmakh
Tetiana Ostrikova, member of the Supervisory Board of JSC ‘AltBank’, member of the board of the All-Ukrainian Association of Lawyers
“I do not support increasing the VAT rate. According to available information, a one percentage point VAT increase yields roughly a billion dollars. That is 45 billion UAH. Considering the total business losses already voiced, how far will that money go? And what will we do when that resource runs out? Raise VAT again? — Tetiana Ostrikova, member of the Supervisory Board of JSC AltBank and the Supervisory Board of the All-Ukrainian Association of Lawyers, exclaimed. — We understand that VAT is a consumption tax. We will all pay that one percentage point more in the price of goods.”
Funding for damaged businesses is needed now, so it is extremely important to understand whether there are any real possibilities to capitalize a preferential lending program for large businesses that we all expect. By what means can this fund be filled.
Large businesses are not eligible for lending under the “5-7-9” program, so we are waiting for preferential lending programs and conditions. I would develop this idea further. Increasing the rate — no.”
The viability of the war-risk fund announced by the minister is also doubted by People’s Deputy and member of the Verkhovna Rada Committee on Finance, Tax and Customs Policy Nina Yuzhanina.
Photo: Zoryana Stelmakh
Nina Yuzhanina, People’s Deputy, member of the Verkhovna Rada Committee on Finance, Tax and Customs Policy
“A fund with state participation will be difficult to capitalize. Because 1% VAT (the increase — Ed.) is doubtful. 90% will be voted down by no one,” the deputy insisted.
“In your program the maximum compensation coverage of the first layer of losses is 10 million dollars. Every enterprise that wants to join this fund must voluntarily pay 2% premium — 200 thousand dollars. The rest must be co-financed by 1% VAT — that is 1,2 billion dollars. And partners will add something, you expect about 2 billion, I think.
Now everyone willing starts entering this fund by paying 2%. What capacity will ultimately be accumulated so that all those who suffered losses can count on maximum compensation?
Of course the question immediately arises: do we trust the state? That this queue won’t be like now at ECA (Export Credit Agency — Ed.), where there are 600 applications and, say, only 200 reviewed. It’s unclear in what order they will be considered and how quickly. So whether your program will take off is a huge question,” Yuzhanina added.
“And in general increasing VAT is a rescue in case of a resource shortage for the Armed Forces. Forget about this war-risk insurance fund,” she cut in.
The need to raise VAT places deputies before a moral dilemma, said People’s Deputy Yaroslav Zheleznyak.
Photo: Zoryana Stelmakh
People’s Deputy Yaroslav Zheleznyak
“In fact we have to increase the tax so that all citizens (because everyone pays VAT one way or another) would pay a particular business for reconstruction. Right?
It pains me to see how business is being shelled now. But my mother, she is from Mariupol where all our business remained, occupied and destroyed, asked why the state compensates one business and not another. That is an absolutely logical question from people in occupied territory.
Although with my head I understand that if we do not help business now, the VAT gap will just grow. This is a moral dilemma that the government will put before the deputies,” Zheleznyak said.
Former Naftogaz CEO Andriy Koboliev believes it makes no sense to demand state preferential loans without insurance. At the same time, he says, insurance enables raising funds for expansion.
Photo: Zoryana Stelmakh
Andriy Koboliev, former head of Naftogaz, founder of EneY company
“From my simple perspective, if we can give 1 billion, and partners give us three or four, for all of us that is the best option. From which tax we take that billion can be debated. But the idea that partners should give us something just like that has long stopped working,” Koboliev said.
Ukrainian entrepreneur, founder of the Textile-Contact trading and manufacturing association Oleksandr Sokolovskyi said many in business generally support the government’s proposal. “It may not please everyone, but if we do nothing, we’re all done,” the entrepreneur briefly summarized.
Photo: Zoryana Stelmakh
Oleksandr Sokolovskyi, Ukrainian entrepreneur, founder of the Textile-Contact trading and manufacturing association.
An alternative to raising VAT could be introducing an import levy, suggests People’s Deputy and Deputy Chair of the Parliamentary Committee on Economic Development Dmytro Kysylevskyi.
“The government already did this in 2014. Then it simply introduced 5% on all imports.
Now we can separate critical and non-critical imports. We will reach an amount that will likely be comparable to or even exceed that VAT percentage. And this will solve two problems at once — the trade balance and capitalization of the fund we are talking about,” the deputy proposed.
Photo: Zoryana Stelmakh
Dmytro Kysylevskyi, People’s Deputy, Deputy Chair of the Parliamentary Committee on Economic Development
He also recalled ready draft laws on investment compensation through taxes. “When the state has no money, the state tells a company: ‘Friends, rebuild, start paying taxes, and we will return part of the taxes you start paying when you recover as compensation for your invested investments. Maybe you will find some funds yourselves.’ Such a structure operates in EU countries; this is how they lure our entrepreneurs. But unfortunately, so far the IMF does not understand that rockets arrive and we need to restore enterprises. So our task is to convince the IMF, vote the bill in second reading the next day and start using it,” Kysylevskyi added.
“One can debate whether increasing the VAT rate by one percentage point is the ideal mechanism to fill the relevant financial resource. Although I don’t see better options at the moment,” said First Deputy Governor of the National Bank of Ukraine Serhiy Nikolaychuk. “Of course increasing VAT also has many downsides. But there are no perfect resources, and it is better to move forward now than to do nothing.”
Photo: Zoryana Stelmakh
Oleksandr Kravchenko, Minister of Economy and Environment of Ukraine
“Don’t like one percentage point of VAT? Fine. What is the alternative?” summarized this part of the discussion Minister Oleksandr Kravchenko. “When we talk about one percentage point of VAT — it is the lever by which we raise a considerable amount of additional financing — donor and private.
Let it not be 1% VAT, but something else. We can significantly reduce this state capital, but then this lever will be much smaller. Will we then be able to make a program adequate to the challenges the economy faces?
We are in active discussion with many international partners. A strong argument is when we say we are ready to put our money in. That works much more effectively than just saying: ‘Give us 4 billion and we will distribute your money as compensations.’”
The minister said they will not create a new agency to manage the war-risk fund. He considers the best option to use the Export Credit Agency with strengthened corporate governance and transparency so it can be a platform entrusted with large compensation sums.
“I agree with you completely, the likelihood of success is low and the resistance is very strong. But here we ask for your support, because we really want to seriously support the Ukrainian economy and Ukrainian business. We are ready to discuss any options, but so far this is the most effective one we see that can work relatively quickly and be adequate to the challenges business faces.”
“But our window is very short. Let’s try to find a solution that gives businesses at least some element of support as we enter this winter with the challenges we face,” the minister said.
Photo: Zoryana Stelmakh
Oleksandr Kravchenko, Minister of Economy and Environment of Ukraine
The state can help business not only with money
What the government should have done for business during all the years of war or at least do as soon as possible is create a single mechanism for documenting losses, emphasizes Tetiana Ostrikova, member of the Supervisory Board of JSC AltBank and member of the board of the All-Ukrainian Association of Lawyers. In her view this would greatly simplify life for entrepreneurs who effectively lack a defined algorithm of actions.
“When a strike happens you have to think how to extinguish the fire while firefighters cannot join because of the alarm, what to do with employees, where to get money, how to attract financing, restore assortment, what to do with logistics, where to get a new warehouse. And at the same time you have to collect five hundred documents from various state bodies,” Ostrikova complained.
Photo: Zoryana Stelmakh
Tetiana Ostrikova, member of the Supervisory Board of JSC ‘AltBank’, member of the board of the All-Ukrainian Association of Lawyers
“Can’t the state create a single window where you submit an application and there will be the State Emergency Service conclusion, a fire report, a criminal proceeding extract, and a Chamber of Commerce conclusion confirming force majeure circumstances, inspection acts from local authorities? …
In June of 25 there was a strike on our office and bank premises, and the inspection act from the local authority, which is necessary in the list of all documents wherever you apply, whether to the tax office or the Chamber of Commerce, we received only a year later — in July of 26!” — says Tetiana Ostrikova.
She also called to remove from the Tax Code the transitional provision 32.1 requiring the Chamber of Commerce to confirm force majeure circumstances when goods are destroyed as a result of enemy weapon strikes.
“If there is a State Emergency Service conclusion about the fire and an act, if there is an extract from the criminal proceeding from the SBU or police that this occurred during a massive missile attack on Kyiv. How should the Chamber of Commerce still have to confirm that these circumstances are force majeure? Why does the Chamber of Commerce in Ukraine have to record the fact of a strike? And without this I have no right to write off goods without paying VAT on destroyed goods.
There are contractual certificates. If a strike happened and I failed to fulfill some obligations to my counterparty, certainly the Chamber of Commerce should confirm that. But there is a Tax Code provision that says if your goods or fixed assets were destroyed during hostilities, somehow the Chamber of Commerce must confirm the hostilities. What logic did deputies have when writing this norm? Why is an extract from the registry of criminal proceedings not enough? Why is the State Emergency Service act not enough? Finally, public media reports, Ministry of Defense statements. I don’t understand why enterprises also have to do this work?” the AltBank supervisory board member said.
She also pointed to the problem of restoring lost documents — for Kyiv and the region the deadline is 90 days. The transitional provisions contain a rule saying that in case of loss of documents in combat zones they may not need to be restored, but the capital and region are not included.
Photo: Zoryana Stelmakh
Tetiana Ostrikova
In addition, Tetiana Ostrikova believes it is necessary to simplify customs control to avoid congestion of vehicles at checkpoints or logistics terminals.
“Our customs officers walk and look for markings on each unit of goods. We live in war, yet somehow act as if it’s peacetime and we must comply with absolutely all legal norms and then boast how resilient we are. That can’t be. We are at a point where we must choose — ‘lights or go.’ Vehicles must get out of these checkpoints and logistics terminals,” Ostrikova noted.
She also criticized the inertia in developing an effective legal mechanism for compensation of losses.
“You can sue the aggressor today — if you are a business — in the Commercial Court of the city of Kyiv. You will get a judgment ordering compensation of damages for billions of hryvnias and hundreds of millions of dollars. But what will you do with it? You will not enforce it in Ukraine because there is nothing to seize to collect that damage.
Abroad there is a practice where companies tried to recognize and enforce such judgments abroad. But unfortunately, or luckily, under international law countries have immunity. Our Supreme Court in 22 stripped the aggressor state of immunity for Ukrainian courts. But in no other country, including EU countries where Russian assets are frozen, does that immunity disappear. You will not have that judgment recognized and enforced against the defendant aggressor state.”
“And the mechanism proposed by the International Registry of Damage does not work today. The convention is not yet ratified, and ratification by 25 countries could take years. By what means, which assets will the fund be filled that will then compensate Epicenter, Rozetka, Novus, Varus, farmers, banks and others? To date there is no source of those assets.
There are so many well-known international lawyers in the country — why did the state not gather them professionally to develop a legal mechanism, for example, to sue the aggressor’s satellites, state enterprises, defense industry companies, to go through commercial arbitration? To date there is no legal mechanism to recover damages from the aggressor. In five years of full-scale war no one has proposed it to business,” Ostrikova noted.
People’s Deputy and member of the Verkhovna Rada Committee on Finance, Tax and Customs Policy Nina Yuzhanina in turn outlined a set of important steps the government can take now to help business. For example, introduce a flexible regime for postponing tax payment deadlines and offer it to affected businesses in Kyiv and the region.
Photo: Zoryana Stelmakh
Nina Yuzhanina, People’s Deputy, member of the Verkhovna Rada Committee on Finance, Tax and Customs Policy
“You can consider for whom and how to establish the cash method for VAT, for which manufacturers, for which chains, what happened to VAT on lost goods. We do not have that deep analysis, so we are unable to tell business what we can do today,” Nina Yuzhanina says.
She believes it is time to introduce profit tax relief for damaged businesses using the industrial park model or the special regime “Diia.City.”
“When the last changes on industrial parks were adopted I proposed to include ‘enterprises damaged as a result of attacks’ in the list; to specify clear criteria and allow, while there are no loans, recovery using current funds.
Because all state programs, even war-risk insurance, if they exist, will start from 1 January next year. And all previous losses will not be eligible for that program. These will be new losses,” Yuzhanina said.
She noted the lack of joint work between the executive and legislative branches to understand who does what. This point resurfaced several times during the nearly two-hour discussion in various interpretations. For example, Andriy Dligach emphasized that the country still lacks a coordinated economic policy and an economic headquarters that would address business and economy problems generally. Each acts alone and cannot resolve them anymore.
“Since 4,5 we have been fighting for survival, but until now the state has not been asked so acutely to support business. Businesses fought on their own. Who borrowed, who used their own resources, whoever could.
We built and invested, but the time has come when alone, without state support and preferential lending, we will not cope. Some financial instruments are needed to support ruined logistics and restore operations. Because we are losing jobs, people — and that is the most painful,” — with these words on behalf of all business in the country Epicenter K co-founder Halyna Hereha ended the discussion.
Photo: Zoryana Stelmakh
Halyna Hereha, co-owner and chief financial officer of the Epicenter K group of companies (center)
Document: PDF proof of the original version of the news item "дискусія про кредити страхування і ПДВ – Підозра". It records the publication content at the moment of the first scan, the preservation date and the source: AgroDay – uncensored on the main issues.
