Kyiv, December 22, 2025 — The landmark conference “Business on the Frontline: Tax Policy, Resilience, and Recovery of the Frontline Economy” was held in the capital. The event brought together over 30 leaders of prominent business associations and community heads to address a vital question: how to sustain economic life in areas facing daily shelling.
A milestone of the conference was the signing of a Memorandum of Cooperation between the Ukrainian Business Council (representing 126 associations and 27,000 enterprises) and the Association of Frontline Cities and Communities (representing over 300 communities). This alliance creates an institutional foundation for lobbying the interests of territories that serve as Ukraine’s “security belt.”
Resilience in the Face of War
Opening the conference, Ihor Terekhov, Mayor of Kharkiv and Chairman of the Association of Frontline Cities, emphasized that business in frontline regions operates in defiance of war logic. Kharkiv currently has 127,000 registered entrepreneurs — more than in the pre-war period. However, the mayor noted that state support remains insufficient, with frontline regions receiving only 13% of loans under the “5-7-9” program.
“We are extending local tax benefits through 2026, but nationwide solutions are needed. Specifically, a 50/50 tax distribution mechanism between the communities from which businesses relocated and those where they are currently operating,” Terekhov stated.
The Fuel Sector: Strategic Service vs. Fiscal Burden
Tetyana Dumenkova, Deputy Head of the Fuel and Energy Business Association (FEBA), raised a critical issue: the mandatory monthly advance income tax payments for gas stations, which range from 30,000 to 60,000 UAH per station, regardless of actual profit.
“In frontline districts, such as the Kharkiv region, gas stations often operate with zero profit. For instance, in a settlement with only 800 residents, a gas station is a strategic facility for the military and locals, but its turnover is minimal. The owner subsidizes this station out of their own pocket because they feel a moral obligation not to leave people without fuel. In such conditions, demanding an advance tax is essentially seizing the funds used to purchase fuel for the front,” Dumenkova declared.
She added that this is not an isolated case but a typical business model for frontline territories. These challenges are further documented in entrepreneur interviews from the Kharkiv region, available on FEBA’s YouTube channel: https://www.youtube.com/@fuelenergyassociation
Consolidated Position of the Business Community
Leading experts and representatives voiced a unified stance:
- Grygol Katamadze (APPU): Criticized the proposal to introduce VAT for Individual Entrepreneurs (FOPs) as being detached from reality.
- Alexander Chumak (Association of Private Employers): Calculated that Kharkiv alone could lose approximately 1 billion UAH due to business “shadowization” if VAT is imposed on FOPs.
- Borys Emeldesh (VPAP): Highlighted that bringing the fuel market out of the shadows (currently 19% shadow share) could bring 10 billion UAH to the budget annually — far more than pressuring small businesses.
- Konstantin Ivanov (Chernihiv CCI): Noted that air raids consume up to one-third of working hours for frontline enterprises, significantly lowering their competitiveness.
- Alexander Popov (Kharkiv Defense Industry Employers): Criticized the “Defense City” law for providing benefits to enterprises in Zakarpattia rather than those operating under fire in Kharkiv or Zaporizhzhia.
The Recovery Strategy: Key Proposals
Following the discussion, a package of proposals was formed to serve as the basis for future advocacy:
- VAT for FOPs: A moratorium until the end of the war; if implemented, the threshold should be raised to European levels (approx. 5 million UAH/year).
- Special Status for Territories: “5-7-9” loans at 1–3% interest; zero customs duties and VAT on imported equipment; fixed gas and electricity rates for businesses.
- Defense Sector Support: 100% state guarantees for loans to frontline enterprises with state orders; extending “Defense City” status to frontline regions.
- Human Capital: Maintaining 100% deferment (reservation) for employees and providing subventions to communities for bomb shelter construction.
- Administrative Relief: A moratorium on inspections, simplified financial monitoring, and the abolition of automatic “risky” status assignments.
Ihor Terekhov concluded: “War damages are colossal — up to 1 trillion dollars. No amount of reparations will save us if we do not create conditions for honest business today. Without free business in frontline cities, the state has no future.”
FEBA continues its active work within the framework of the Memorandum to achieve fair and realistic conditions for every facility holding the country’s energy shield on the line of fire.
