This article examines the methodology for estimating the Value-Added Tax (VAT) compliance gap, with specific application to Ukraine and a systematic comparison against European Union member states and candidate countries. Using the top-down VAT gap methodology endorsed by the European Commission and IMF, we reconstruct Ukraine's VAT compliance gap trajectory from 2015 to 2024 and benchmark it a...
Category: Shadow Economy Dynamics
Tax burden, informatization, and shadow economy dynamics in Ukraine. Scenario analysis and game-theoretic approaches.
VAT Gap Estimation for Ukraine: Methodology and Cross-Country Comparison
The value-added tax (VAT) compliance gap represents the difference between theoretical VAT liability and actual VAT revenue collected, serving as a primary quantitative indicator of tax evasion and shadow economic activity. This article examines the methodological landscape for VAT gap estimation, applies a comparative framework to Ukraine's fiscal context, and benchmarks Ukrainian VAT performa...
Regional Disparities in Ukraine’s Shadow Economy: An Oblasts-Level Analysis 2015–2025
Ukraine's shadow economy constitutes one of the most persistent structural challenges to its fiscal sustainability and governance reform agenda. While national-level estimates have been widely studied, the regional dimension — how shadow activity distributes across Ukraine's 25 oblasts — remains underexplored in quantitative literature. This article presents an oblasts-level analysis of shadow ...
Digital Payment Adoption and Shadow Economy Reduction: Evidence from Ukraine’s Diia Platform
This article examines the relationship between digital payment adoption and shadow economy reduction in Ukraine, with particular focus on the Diia government services platform as a digitalization catalyst. Drawing on National Bank of Ukraine transaction data (2015–2025), cross-country panel evidence, and sector-level informality estimates, we investigate whether cashless payment penetration cau...
Tax Evasion Mechanisms in Ukraine: A Typology of Shadow Economy Channels
Ukraine's shadow economy remains one of the largest in Europe, with wartime conditions creating both new evasion channels and shifting the composition of existing ones. This article develops a comprehensive typology of tax evasion mechanisms operating in Ukraine, classifying shadow economy channels along three dimensions: mechanism type, sectoral concentration, and detection difficulty. Drawing...
Policy Implications and a Decision Framework for Shadow Economy Reduction in Ukraine
Paper 3 of 3 in the series "Shadow Economy Dynamics." Builds on Paper 1: Problem Landscape and Paper 2: Scenario Analysis.
Scenario Analysis: Modeling Three Futures for Ukraine’s Shadow Economy (2025–2030)
In Paper 1 of this series (Ivchenko, Ivchenko & Grybeniuk, 2026a), we established that Ukraine's shadow economy has remained persistently high — between 30% and 45% of official GDP over the decade 2015–2025. We identified two competing feedback loops: a reinforcing cycle where high tax burdens push economic actors into informality, and a balancing mechanism where digitalization increases tr...
Tax Burden, Digitalization, and Shadow Economy in Ukraine: A Problem Landscape (2015–2025)
Ukraine's shadow economy remains one of the largest in Europe, consistently estimated at 30–45% of official GDP over the past decade. This phenomenon directly undermines fiscal stability, distorts market competition, and complicates the country's path toward EU accession. The interaction between tax policy, digital governance, and informal economic activity forms a complex adaptive system where...