Ukraine’s Displaced Left Behind: Why Bureaucracy Is Turning Against War Survivors

Source: Author’s Facebook page

The true state of a country is revealed not by declarations, strategies, or polished presentations at government forums with slogans like “economic resilience,” “support for IDPs,” or “human capital,” but by how the system treats people who have already lost everything.

The real state of the country is visible in small everyday situations, where a person is simply trying to do something normal: get a service, pay for work, spend money officially, not cheat, not hide, and not play schemes.

At this moment, the system suddenly shows its true scoreboard. Not patriotic, not European, and not reformist. But old, fiscal, suspicious, and dead. The face of a state that still does not understand: the economy is not held up by cabinet resolutions but by people who fix something every day, program, build, treat, survive, and try with all their might to stay within the legal field.

There is a person. Ukrainian. Individual entrepreneur. He performed repair work. He issued an invoice for 8,835 hryvnias.

This is not a multi-million dollar scheme, not offshore, not a state tender with a subcontractor, and not fictitious “information support services.” This is a small business in its most material, human form. Someone fixed something or did other work in the service sector. Someone has to pay for it. In a normal economy, this is where the story ends: the payment is made, taxes are paid, and everyone continues to work. But in Ukrainian reality, this is the beginning of a bureaucratic labyrinth.

The individual entrepreneur is formally registered in the temporarily occupied territory, in the Mariupol district. That is, a person whose home and life were destroyed by the Russian occupation suddenly becomes not just an entrepreneur for the Ukrainian tax system but also a problem. Not a citizen who needs to be as easy as possible to return to the economy, but a risk. A tax anomaly.

In a normal legal system, cooperation with small businesses works simply: you transfer money to the account of an individual entrepreneur, and the entrepreneur pays his single tax (for example, 5%). That’s it. You are the customer, he is the contractor, the state gets its share, and the transaction is closed.

But as soon as the tax address “Mariupol” lights up in the register, fiscal schizophrenia sets in. According to the tax legislation on temporarily occupied territories (TOT), the state actually cancels the presumption of normality of this entrepreneur. For the Tax Service, this individual entrepreneur suddenly ceases to be a full-fledged business entity. The law begins to treat him as an ordinary individual with a “toxic” registration.

What does this mean in practice? The Tax Code automatically assigns the status of “tax agent” to the customer company.

That is, the state literally tells the accountant: “We are not going to figure out how he will work during the occupation or after it. We simply do not trust him. Therefore, if you want to pay him for repairs, you cannot process it as a regular payment for services of an individual entrepreneur. You must pay 18% personal income tax (PIT) and military duty on top of that for such a transaction.

That is, we see the so-called presumption of fiscal guilt—instead of automatically transferring individual entrepreneurs from the occupied territories to a safe tax status or offering a simple one-click procedure in “Diya,” the state, by default, treats them as potential violators who finance terrorism. A person must prove they are not a criminal just to get their 8,000 hryvnias.

How much does it cost the state and business to maintain this barrier? The working hours of an accountant, lawyer, and tax inspector who will deal with this payment cost the economy more than the amount of potential taxes from these 8,835 hryvnias. This is an economy of burning resources on empty control.

Small businesses do not have legal departments and compliance officers. Small businesses live in a daily money circulation regime. It turns out that the system makes legal payments toxic; it does not protect the budget—it directly stimulates the shadow economy. The state, with its own hands, forces people to switch to cash and “black” transfers.

At the level of symbols, the state says, “Mariupol is Ukraine; we support you.” At the level of tax practice, it tells counterparties: “Working with these people is risky and unprofitable.” This creates a stigma where IDPs become undesirable partners not because of poor work, but because of their bureaucratic status. This looks especially cynical in the context of war. People from Mariupol, Melitopol, Berdyansk, or Kakhovka have already paid too high a price. They have lost everything. And when such a person does not stand with an outstretched hand for a subsidy but creates GDP and jobs herself, the state should carry her in its arms.

Instead of a simple mechanism, “We see that your address is occupied. Here is an automatic update, minimum barriers, just work.” The system actually says, “You are still ours, but if someone wants to pay you officially, everyone will have problems.”

Large corporations will cope with this. They will hire consultants, restructure payments, and create a new LLC. But microbusinesses will not. For a repairman, 8,835 hryvnias is not abstract liquidity. It is food, rent, and materials for tomorrow. A blow to this money is a direct blow to the microeconomics of survival.

Distrust in one’s own people is the most expensive tax

There is a huge gap between “controlling the risks of financing the occupier” and “creating nightmares for our own citizens who have fled from shelling.” Smart politics distinguishes a real threat from the chaos of war. Stupid, uneducated politics puts everyone in one box and washes their hands of it, leaving the accountant and the self-employed person to sort things out among themselves. We can talk all we want about the return of Ukrainians from abroad. But people are not brought back only with grants or security. They are brought back by the feeling that they can live and work at home without humiliation.

True support for small business is when a person from the occupied territory is not afraid to issue an official invoice, and the customer is not afraid to pay it. When the state understands, each artificial barrier is one fewer legal transaction and one fewer motivated entrepreneur. Today it is an invoice for 8,835 hryvnias. Tomorrow – hundreds of such invoices. The day after tomorrow, thousands of people will give up, close individual businesses, go into hiding, or leave the country. And officials will call this “low-tax culture.”

Pslyamova: When the state punishes a person for trying to work honestly, it does not collect taxes. It breeds distrust because the state, instead of saying, “Thank you for surviving and working,” says, “Prove that you are not a problem,” and fails to prosecute economic offenders. It is successfully achieving its own independent economic future, dooming future generations of Ukrainians to live in debt at the expense of overseas loans, which we then exchange for our minerals, prospects for European integration, the sale of land, and other terrible things for us, as the Indians once exchanged for beads.

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