Russians are the leaders in Ukraine as individual entrepreneurs – which foreigners register businesses and in which industries

Main points

• As of May of this year, there were 21,967 registered individual entrepreneurs in Ukraine whose owners are foreigners, with every fifth of them being Russian.
• The main areas of activity of foreign entrepreneurs are retail trade, warehousing, wholesale trade, hotel and restaurant business, and the IT sector.

Every fifth foreign individual entrepreneur in Ukraine is Russian / Collage by Channel 24, photo by Getty Images, thestar.com.

The number of entrepreneurs with foreign citizenship continues to grow in Ukraine. As of mid-May this year, 21,967 individual entrepreneurs owned by citizens of other countries were officially registered in the country.

Where are the most foreign sole proprietors?

Despite the full-scale war and difficult economic situation, foreigners do not stop opening their own businesses in Ukraine, writes Opendatabot.

On average, about 1,896 new individual entrepreneurs founded by citizens of other countries will be registered each year after 2022. Currently, the leaders in the number of such individual entrepreneurs are: Kyiv – 5,216 entrepreneurs, Kharkiv region – 3,506, and Odessa region – 3,295.

These three regions account for almost 55% of all foreigners doing business in Ukraine. This concentration is explained by active trade, a large population, developed logistics, and much wider opportunities for earning money.

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Citizens of which countries most often open sole proprietorships?

The largest number of foreign entrepreneurs turned out to be Russian citizens. Currently, there are 4,593 registered individual entrepreneurs in Ukraine whose owners have Russian citizenship. In fact, every fifth foreign entrepreneur in the country is Russian.

Also, the top five countries whose citizens are most active in doing business in Ukraine include:

1. Vietnam – 1,994 individual entrepreneurs;
2. Azerbaijan – 1,635;
3. Uzbekistan – 1,469;
4. Moldova – 1,118.

Almost half of all foreign entrepreneurs in Ukraine come from these five countries.

What business do foreigners most often choose?

The most popular area among foreign entrepreneurs remains retail trade. There are 6,346 individual entrepreneurs working in this area. Foreigners are also actively developing business in the following industries:

• warehousing activities – 2,746 entrepreneurs;
• wholesale trade – 1,732;
• hotel and restaurant business and HoReCa – 1,703;
• IT sector – 1,624.

Experts explain the popularity of these areas by the relatively quick start of business and stable demand even during the war.

Why do Russians still open sole proprietorships in Ukraine?

Conditions and reasons that allow Russians to register a business in Ukraine:

• Legal stay in Ukraine: Many of them have lived in Ukraine for years, have family or business connections, and have a residence permit that allows them to legally register as individual entrepreneurs.
• Lack of legislative prohibition: Despite the martial law, Ukrainian legislation does not directly prohibit Russian citizens from registering as individual entrepreneurs if they have the right to legally reside in the territory of the state.
• Real estate and assets: Some Russian citizens own property or shares in companies in Ukraine, which necessitates the need to legalize income, pay taxes, and conduct business activities.

Opening of individual entrepreneurs by foreigners is a completely normal and legal practice. People who have a temporary or permanent residence permit in Ukraine receive a RNOKPP (tax number), so they can officially conduct business and pay taxes on an equal basis with citizens of Ukraine. As for citizens of Russia, they are no exception to this rule. Only those who legally reside in Ukraine can open their own business. In this case, the procedure is no different from opening an individual entrepreneur by any other non-resident,
– said lawyer Denis Popov.

What does this mean?

1. The Ukrainian market, even during the war, remains attractive for small businesses.
2. The greatest activity is demonstrated by large cities and regions with strong trade.
3. Foreigners mainly choose areas with fast money turnover – trade, logistics, and HoReCa.
4. The large number of Russian sole proprietorships may continue to spark public debate about business background checks and owner checks.

What is the forecast? Experts expect that the number of foreign entrepreneurs in Ukraine will continue to grow, especially after the security situation stabilizes and the economy recovers more actively.

At the same time, the state will likely increase monitoring of businesses associated with Russian citizens due to issues of national security and financial control.

Note: Despite the war and economic risks, Ukraine continues to be a country where foreigners open and run businesses. This both demonstrates the openness of the Ukrainian market and raises new questions about the control and security of the business environment.

New corporate tax law: how could it affect business in Ukraine?

As economist Oleg Getman explained to Channel 24 , the likelihood that the new tax bill will come into effect in 2027 is quite low. He predicts that it will either come into effect in 2028, or in the year when Ukraine joins the EU.

In addition, according to Hetman, entrepreneurs will be reluctant to switch to VAT if the bill is passed, in particular, he says that only 20% to 30% of individual entrepreneurs can do this. And all the rest will most likely use the scheme of splitting the individual entrepreneur, opening it to one of the family members.

Oleg Getman

Coordinator of expert groups of the Economic Expert Platform

Accordingly, it is not worth expecting that after the change in taxation, prices for all goods will increase sharply. This will affect more those who will still pay VAT. At the same time, their share in the total turnover is relatively small, and therefore the overall impact on prices will be limited.

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Which foreigners are still “capturing” Ukrainian business?

• There are 246 companies with Hungarian owners operating in Ukraine, of which every seventh has an annual income of over 100 million UAH.
• Most Hungarian businesses are concentrated in Transcarpathia, and the most profitable companies are based in Kyiv.