ESBU initiatives — tax crimes without suspicion. A lawyer's perspective

The proposed approach involves moving away from a purely punitive approach to economic investigations and transitioning to a model of quick, fair, and predictable decisions.

How it works today: at the end of 2025, ESBU detectives, together with prosecutors, referred 187 criminal proceedings to court under Part 4 of Article 212 of the Criminal Code of Ukraine (exemption from liability for reimbursement of taxes and losses to the state).

Each of them went through the same stages:

• detection of a tax offense;
• pre-trial investigation;
• recognition of the violation as a crime and compensation for the damage caused;
• notification of suspicion;
• submission of a motion for exemption from criminal liability;
• court proceedings and resolution of the issue of closing the proceedings by the court on the basis of Part 4 of Article 212 of the Criminal Code of Ukraine.

The essence of the ESBU initiative is to complete the process at the third stage if the business entity acknowledges the fact and amount of damage caused to the budget and voluntarily compensates for it. Additionally, it is proposed to pay a contribution to the budget (for example, 50% of the amount of damage) with the funds earmarked for the Armed Forces of Ukraine and a legal mechanism for closing criminal proceedings without announcing suspicion.”

Since the published post and the author’s article by the head of the ESBU contained calls for discussion, I could not resist expressing my own opinion on the proposed changes.

As of today, we have the following version of Part 4 of Article 212 of the Criminal Code of Ukraine, which allows for the closure of criminal proceedings for tax crimes: “A person who has committed the acts provided for in parts one and two of this article, or the acts provided for in part three (if they have led to the actual non-receipt of funds in particularly large amounts by budgets or state target funds) of this article, shall be exempt from criminal liability if, prior to being brought to criminal liability, taxes, fees (mandatory payments) have been paid and the damage caused to the state by their late payment (financial sanctions, penalties) has been compensated.”

As of today, we have the following interpretation of “criminal liability” — it is a stage of criminal proceedings that begins from the moment a person is notified of suspicion of committing a criminal offense (clause 14, part 1, Article 3 of the Criminal Procedure Code of Ukraine).

Legally, in order for a person to be exempt from criminal liability under Part 4 of Article 212 of the Criminal Code of Ukraine, it is necessary that by the time of notification of suspicion, the person has paid all tax obligations and fines related to the violation of tax legislation.

Under Article 44 of the Criminal Code of Ukraine, a person who has committed a criminal offense is exempt from criminal liability in the cases provided for by this Code, exclusively by a court. The procedure for exemption from criminal liability is established by law.

Such a law is the provisions of Articles 285-288 of the Criminal Procedure Code of Ukraine. These provisions do not link the possibility of exemption from criminal liability in cases provided for by this Code to the condition that the person admits their guilt.

Moreover, exemption from criminal liability under Part 4 of Article 212 of the Criminal Code of Ukraine, when a person agrees to such exemption, is their absolute right. This legal term indicates that, firstly, the court has no right not to exempt a person from criminal liability, and, secondly, such exemption does not require the establishment of a subjective factor (admission of guilt) and the motives that the person pursued when agreeing to the exemption.

Now, my view of such “fair initiatives” is as follows: first, this is complete legal nihilism. Violations of tax legislation with a criminal component (fictitious transactions, use of tax loopholes, etc.) are subject to investigation. At the same time, disputes between taxpayers and tax authorities that do not involve the formation of tax liabilities on the basis of forged documents or deliberate actions to evade taxes do not contain a criminal component and cannot be prosecuted under Article 212 of the Criminal Code of Ukraine.

In fact, the ESBU’s initiatives reduce all cases of accrued tax liabilities to deliberate illegal actions aimed at tax evasion, which are prosecuted under criminal law. This is legally incorrect and has nothing to do with an honest and fair dialogue between the state and taxpayers.

Secondly, the ESBU’s “fair initiative” is nothing more than a return to the not-so-positive past of criminal procedural law, when admission of guilt was the queen of evidence. As I mentioned above, in order to close criminal proceedings in connection with the exemption of a person from criminal liability on the basis of Part 4 of Article 212 of the Criminal Code of Ukraine, no admission of the circumstances of the tax offense is required. But the ESBU wants improvement, although it is unclear what kind of improvement and for whom.

Thirdly, the ESBU’s “fair initiative” attempts to provide for a measure of punishment for a person exempt from criminal liability (payment of a fine in the amount of 50% of the accrued financial sanctions (I leave the addressee of the payment in brackets, because I consider it a cynical manipulation on the part of the initiator)), which in no way fits in with the institution of exemption from criminal liability. How can a person whom the state has exempted from criminal liability be punished? This is again legal nihilism.

Fourth, the ESBU’s “fair initiative” is nothing more than an attempt to impose additional fines on taxpayers, which for some reason must be established by the Criminal Code of Ukraine. As mentioned above, such fines cannot be considered punishment, and they cannot be classified as a type of punishment, so the author of the idea does not explain under what guise such fines should be introduced into the criminal law system. He is probably waiting for proposals from businesses, which, in his opinion, should welcome such “purely punitive logic” (quote taken from the explanatory part of the announced initiatives).

To sum up: I believe that the proposed changes are not in the interests of business; they are dishonest and unfair. As for not informing a person of suspicion, this issue requires in-depth professional discussion. On the one hand, it is good that there is no suspicion, but on the other hand, if there is no suspicion, there are no signs of a criminal component. And if there are no signs of a criminal component, then what is the role of the ESBU, which is supposed to detect and investigate it? Finally, what are the procedural grounds for closing registered criminal proceedings, which are currently absent from Article 284 of the Criminal Procedure Code of Ukraine, and who should make the procedural decision to close them?