Measures against government interference in business activities

By his Decree No. 538/2025 dated 21 July 2025, the President of Ukraine enacted the decision of the National Security and Defense Council of Ukraine (NSDC) introducing legal and organizational measures related to the moratorium on unjustified business inspections and interference by state bodies in business activities, and stimulating economic growth in Ukraine.

The NSDC decision defines a set of tasks for state bodies, aimed at limiting inspections and simplifying the business environment. We shared our thoughts on this in our article on Forbes.

Details of the decision are given below.

Partial moratorium on inspections

The NSDC decision requires that the Cabinet of Ministers of Ukraine (CMU) immediately establish restrictions on inspections carried out by the State Tax Service of Ukraine (STS) and the State Customs Service of Ukraine targeting the two categories of taxpayers:

1. Authorized economic operators (only 90 entities as of May 2025)
2. Entities with insignificant risks that are not engaged in the circulation of excisable goods

Currently, the term “insignificant risks” has not been clearly defined. Most likely, it refers to the risk criteria as set out in the Procedure for scheduling regular documental tax audits of taxpayers, approved by Order of the Ministry of Finance of Ukraine No. 524 dated 02 June 2015, and to the “white business club”.

Thus, despite the eye-catching headlines, the moratorium will apply only to a handful of businesses.

Risk-based approach to business supervision (control)

The NSDC requires that the CMU urgently take steps to improve the methodology used by tax and customs authorities when applying a risk-based approach and that the CMU strengthen control over high violation-risk areas.

Although this may counterweigh the partial liberalization of tax and customs control, the lack of clarity around what constitutes “high violation-risk areas” raises concerns about potential abuse in applying this formula.

Deregulation and reduction of administrative burden

The State Regulatory Service of Ukraine (SRS) is tasked with submitting proposals to the CMU on how to:

1. minimize costs and reduce administrative burden on business,
2. eliminate duplication of functions performed by the state supervisory (control) bodies,
3. streamline control procedures using the risk-based approach.

Within one month, the SRS must also submit proposals to the CMU on how to simplify the business environment through deregulation and how to improve the licensing and permitting systems.

In a separate clause, the NSDC gives the CMU one month to ensure protection of the rights and interests of foreign investors, including those with a foreign capital interest.

Notably, there have been repeated reports of legally questionable pressure tactics against foreign investors, as highlighted in our article on Liga.net.

We look forward to further details on what the protective measures will be.

Recommendations to law enforcement agencies

The NSDC recommends that law enforcement agencies, within one month, complete the review of criminal proceedings in which “the lawfulness of business entities’ actions is determined”, and decide on injunctive measures to be applied in such proceedings.

This likely refers to abuses involving searches, asset seizures, and other coercive measures.

The NSDC also recommends that heads of pre-trial investigation bodies and prosecution authorities monitor the lawfulness of investigative actions and the application of injunctive measures with respect to business entities.

However, the ambiguous wording makes it unclear whether this applies to criminal proceedings against individual entrepreneurs only, or against the management of legal entities as well.

Furthermore, the decision says nothing about the abusive initiation of proceedings – for example, in cases where the STS does not recognize liabilities as disputed after filing a lawsuit in a court but, instead, waits for a ruling on initiation of a court proceeding.

Accelerated consideration of certain draft laws

The NSDC recommended that the Parliament speed up the consideration of several draft laws, in particular:

1. Draft Law No. 12439, which proposes amendments to the Criminal Procedure Code of Ukraine, aimed to better protect the rights and interests of business. Among other things, it would:

1. establish a two-month term for asset seizure, with an option to extend by the ruling of the investigating judge.
2. expand the rights of the defense (e.g., to appeal against refusal to cancel the seizure of property, to involve an expert, to request a change of jurisdiction, etc.),
3. introduce the institution of a separate ruling of the investigating judge or the court to respond to violations within the criminal process.

The NSDC emphasized the importance of considering the following proposals from the Prosecutor General’s Office. These include:

1. Information about possible violations by businesses may be entered into the Unified register of pre-trial investigations only by the head of the prosecutor authorities.
2. The use of analytics prepared by the Bureau of Economic Security and the STS in criminal proceedings must be regulated.
3. The requisition of property, documents, information or other data from businesses must be agreed on with the prosecutor.

2. Draft Laws No. 13414 and No. 13415, which propose tax incentives and preferential customs treatment for investment projects in the processing industry.

3. Draft Law No. 5837, which seeks to revise the Law of Ukraine “On the fundamentals of state supervision (control)” by introducing updated approaches to control measures. Specifically, it would:

1. introduce the concept of “audit” as a voluntary inspection requested by the company, with no sanctions or other punitive outcomes,
2. establish state supervision (control) boards as advisory and consultative bodies at the controlling bodies to consider complaints against actions (omission) and decisions of the controlling bodies.

4.      Draft Law No. 5838, which proposes amendments to the Code of Ukraine on Administrative Offenses to increase the liability of officials in the controlling bodies for legal violations during inspections.

In particular, officials would be held accountable should their decisions following an inspection be later declared unlawful by the court.

We hope these changes will become an effective tool for holding controlling bodies’ officials accountable for their unjustified and illegal decisions.

We will continue to monitor the implementation of this decision and keep you informed of the latest updates.

_{The Deloitte overview indicated above is solely informative by nature and should not be treated as an official advice without a separate engagement of our professionals.}

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