At the beginning of 2025, Ukraine’s retail fuel market underwent systemic changes. The introduction of a mandatory advance corporate income tax created a fixed financial burden on fuel stations—ranging from UAH 30,000 to 60,000 per month—regardless of sales volumes, profitability, or seasonal factors.

As a result, over 270 licenses were revoked in the first quarter alone, and total revocations reached nearly 300 within four months. Dozens of operators exited the market, while tax revenues became volatile. In our article for “Mind.ua“, we shared our perspective and position on the issue.

The Voice of the Market: Taxation as a Barrier to Survival

Since early 2025, the Fuel and Energy Business Association has received numerous appeals from small and medium-sized operators working in regional markets. According to these businesses, the new tax regime has effectively become a “monthly fee for the right to operate.” For companies with limited turnover and no ability to quickly adapt their financial models, this means either a loss of viability or complete closure.

Taxes Are Rising – Operators Are Disappearing

According to the State Tax Service, 247 retail fuel licenses were revoked in January and February 2025. This trend continued in March and April, bringing the total number of revoked licenses to 294 within just four months. It is important to note that one operator may hold several licenses—for example, one per station or gas module—so the loss of approximately 300 licenses usually corresponds to 60–70 companies exiting the market or suspending operations. This trend is illustrated in the accompanying chart, which shows a decline in the number of active operators from 455 in December 2024 to 390 in April 2025.

This means that over 10% of market participants had ceased operations or surrendered their licenses by the beginning of the year—an especially painful blow to regional markets where large national chains are often absent. At the same time, the state was receiving stable but uneven revenue from advance tax payments.

The increasing fiscal burden has not been accompanied by market growth—on the contrary, it has led to contraction. The ongoing outflow of companies also undermines the long-term tax base—not only corporate income tax but also VAT, personal income tax, social security contributions, and excise duties.

The European Approach: Flexibility and Adaptability

Most EU countries apply flexible tax models for small-scale fuel retailers. According to the Tax Foundation 2024, countries such as Poland, the Czech Republic, and Hungary provide tax relief for fuel stations in rural areas, as well as deferral mechanisms and simplified rules for local operators. The core objective of these approaches is to preserve the legal business sector as a foundation of fuel infrastructure—not to displace it.

In contrast, according to Ukrainian media reports and industry studies, the share of the illegal retail fuel market in some regions has reached 30%. This is the result not only of weak enforcement but also of unequal conditions: legal businesses are required to pay fixed advance taxes, while illegal operators are entirely unregulated. Under such circumstances, fiscal pressure only strengthens the competitive advantage of the shadow segment.

Position of the Fuel and Energy Business Association

The Association supports the development of Ukraine’s economy and believes that fiscal policy should encourage business activity—not hinder it. That is why we advocate for a revision of the current tax model in the fuel sector—taking into account real economic conditions, sales volumes, seasonality, and regional specificities.

The relevance of the issue is underscored by a recent survey conducted among fuel and energy companies, which identified advance payments as the main barrier to continued operations. Based on this feedback, the Association is initiating the signing of an open memorandum of cooperation with small and medium-sized businesses in the fuel sector. In June, a professional meeting with market participants is planned, during which specific policy proposals will be developed, including:

• adapting the tax model to the scale of business operations;
• strengthening digital oversight to combat the shadow market;
• maintaining a continuous professional dialogue between the government and market stakeholders.

A tax model based on fixed obligations—regardless of business dynamics—places a critical burden on small and medium-sized enterprises, particularly those that ensure fuel accessibility in local communities and remote areas. This threatens not only tax revenues but also the infrastructure capacity of the fuel sector. A strategically sound approach would be to transition to a flexible, economically justified fiscal model—one that supports legal operators, promotes transparency, and creates favorable conditions for the development of SMEs in the energy sector.