The White Business Club: Who Is Refused, Who Is Removed, and What the Courts Have Said

Not a Reward, but a Statistical Selection

“White business club” is a marketing label, not an official term. In law it is the List of taxpayers with a high level of voluntary compliance with tax legislation, and its legal basis is subparagraph 69.41 of paragraph 69 of Subsection 10 of Section XX “Transitional Provisions” of the Tax Code of Ukraine, the provisions of which have been reworked several times. The procedure itself is governed by Order of the Ministry of Finance of Ukraine No. 495 of 7 October 2024, registered with the Ministry of Justice on 14 October 2024 under No. 1539/42884, likewise as subsequently amended.

The regime is time-limited: it applies for the duration of martial law and until 31 December of the year in which martial law is terminated or lifted.

The principal misunderstanding with which clients approach the Firm lies in the name itself. The status is not a recognition of integrity and does not depend on whether the company has breached the law. It is determined by two filters, and the second of them has nothing to do with legality.

The first filter comprises the twelve formal requirements of subparagraph 69.41.1: no tax debt exceeding 3,000 non-taxable minimum incomes; no arrears of the single social contribution; a cap on the amount of penalties for breaching reporting deadlines; the absence of a decision confirming that the taxpayer meets the VAT riskiness criteria; the absence of sanctions; the absence, among founders and ultimate beneficial owners, of citizens of the aggressor state or of persons located there; no change of the principal type of activity during the last twelve months; and the presence in the register of information on the ultimate beneficial owner.

The second filter comprises the statistical criteria of subparagraph 69.41.2. The company’s indicators are compared with the averages for its industry. And here a formally law-abiding taxpayer does not make the List if it pays taxes or salaries below the average level. Compliance in this construction is measured not by observance of the rules, but by one’s position in the distribution.

Why There Are Almost No Sole Traders in the List

The Code establishes seven separate sets of criteria: for legal entities on the general taxation system, Diia.City residents, single tax payers of the third and fourth groups, sole traders on the general system, sole traders of the third group, and a separate rule for newly established taxpayers — they may be included no earlier than one calendar year from the date of registration with the tax authority.

As at the end of March 2026, the List included 9,251 entities, distributed in a telling manner:

• legal entities on the general taxation system — 4,788;
• legal entities on the simplified system, fourth group — 1,720;
• legal entities on the simplified system, third group — 1,689;
• sole traders on the simplified system, third group — 507;
• Diia.City residents — 476;
• sole traders on the general taxation system — 71.

Sole traders therefore account for 578 entities out of 9,251, a mere 6.2 per cent, and on the general system there are 71 sole traders in the entire country.

The reason lies not in any lack of integrity on the part of small business, but in the design of the criteria. For third-group sole traders, declared income exceeding UAH 5 million for the reporting period is required. For legal entities on the general system and third-group single tax payers, the salary criterion applies only where the average monthly headcount is not fewer than five persons.

A company with four employees will not make the List whatever its tax payment indicators. The club may therefore be regarded, by its very design, as an instrument for medium-sized and large business.

The Salary Criterion: A Moving Threshold

The salary criterion appears in almost every category and is in practice the principal barrier. The Code puts it as follows: the indicator of the average monthly salary accrued or paid over the last twelve reporting months must equal or exceed the average salary in the relevant industry in the relevant region multiplied by a factor of 1.1, while being no less than one minimum wage.

The factor of 1.1 means that being at the market level is not enough — one must be at least ten per cent above the average for one’s industry in one’s region.

Order No. 495 sets out the mechanics of the calculation. The average monthly salary for a taxpayer is determined as the total accrued income under income code 101 (column 3a of Annex 4DF) divided by the number of employees, and only the unique registration numbers of those who worked a full month are taken into account. The industry average for the region is then calculated as the sum of the individual taxpayers’ indicators divided by the number of taxpayers in that industry in that region, in hryvnias.

The practical consequence may not be apparent at first glance. According to the industry analytics of the State Tax Service of Ukraine, the spread of average salaries between regions within a single NACE class exceeds fourfold. This means that two companies with an identical payroll and the same type of activity face different fates: one meets the criterion, the other does not, purely because of the region of registration.

The second consequence matters even more: the threshold moves every quarter. Over a single year, individual regional indicators have tripled. A person may lose the status without changing anything in their activity — simply because the average for their industry in their region has grown faster than their own salaries.

For these purposes, the industry is determined by the principal type of economic activity at class level under NACE DK 009:2010. Together with the requirement that the principal type of activity remain unchanged for the last twelve months, this yields a planning conclusion: if you are being compared with the “wrong” industry, putting that right will take a year.

The Composition of the List Is Unstable

The List is approved no later than the last working day of March, May, August and November, and is published on the fifteenth working day from the date of approval. The notion of the status as something obtained once and for all does not survive scrutiny against the data.

The number of entities in the List by period:

8,254 — October 2023 to September 2024;

8,199 — January to December 2024;

9,673 — April 2024 to March 2025;

7,149 — July 2024 to June 2025;

7,638 — October 2024 to September 2025;

8,991 — January to December 2025;

9,251 — April 2025 to March 2026.

Between the third and fourth cycles the composition contracted by 2,524 entities — more than a quarter. These are not isolated removals on sanctions grounds or on grounds of connection with the aggressor state, which under the Code are effected within three working days of the fact being established. This is a mass recalculation of the statistical criteria, in which the moving threshold cuts off those who were previously inside.

The industry structure is as expected: wholesale and retail trade — 1,993 entities, agriculture — 1,811, manufacturing — 1,508, construction — 650, information and telecommunications — 589, real estate — 587. The geography reflects economic activity: the city of Kyiv — 1,810, Dnipropetrovsk region — 842, Kyiv region — 687, Lviv region — 682, Kharkiv region — 476. In Donetsk region there are 31 entities, in Luhansk region — 2.

What the Status Actually Gives, and What It Does Not

Subparagraph 69.41.3 establishes five features of tax administration. Supervisory authorities do not commence scheduled documentary audits, or certain unscheduled audits, in respect of such taxpayers. The period for desk and documentary audits of VAT refund claims is reduced to five and ten working days respectively. Individual tax consultations are provided exclusively by the central office of the State Tax Service within fifteen calendar days, with no possibility of extending that period. A compliance manager is assigned to the taxpayer, and interaction with them may take place orally and by videoconference. And, separately, the right to obtain on request, within five days, information held by the supervisory authority that may indicate tax risks in the taxpayer’s activity, together with advice on eliminating those risks.

The last of these deserves particular attention: it is the only channel provided by legislation through which a taxpayer can learn which risks the State Tax Service of Ukraine sees in its specific activity. Outside the List no such right exists.

The limits of the protection are, however, narrower than they are usually presented. Protection from scheduled audits does not apply to taxpayers producing or selling excisable goods, organising gambling, or providing financial or payment services. It does not apply to unscheduled audits on the extensive list of grounds in paragraph 78.1 of Article 78 of the Code, including transfer pricing control and the taxation of non-residents’ income. And it does not apply where a copy of the order to conduct an audit was served on the taxpayer before the date on which the List was published.

For an exporter with transactions subject to transfer pricing, or for a financial company, the practical value of the status falls sharply. That is worth calculating before spending resources on meeting the criteria.

There is also an option that is scarcely ever mentioned: a taxpayer may submit a notification refusing the publication of its data, in which case information about it is removed from the published List. All the benefits are retained. The status can therefore be held without publicity.

Subparagraph 69.41.6 and Why It Does Not Bar Protection

The Tax Code of Ukraine contains a formulation that looks like an obstacle to any dispute: the fact of a taxpayer’s inclusion in, or removal from, the List applies exclusively for the purposes of subparagraph 69.41 of that same Code. One would logically expect the supervisory authority to object that the provision creates no other legal consequences and that there is therefore no infringed right.

The case law of 2026 shows that the courts read this differently. Two cases settle the question from opposite directions.

Case One: The Status Exists, but an Audit Has Been Scheduled

Limited liability company “S” was included in the List by Order of the State Tax Service No. 568 of 30 May 2025, as at May 2025. Notwithstanding this, the taxpayer was not removed from the annual schedule of scheduled documentary audits, which is drawn up under the Procedure approved by Order of the Ministry of Finance of Ukraine No. 524 of 2 June 2015.

The company applied to the court seeking a declaration that the inaction was unlawful and an order to take certain actions. By judgment of the Dnipropetrovsk District Administrative Court of 23 December 2025 in case No. 160/23574/25 the claim was allowed. By the ruling of the appellate court, the appeal of the tax authority was dismissed and the judgment of the first-instance court was upheld.

The practical conclusion: the status is a ground for demanding removal from the audit schedule, and a failure to effect that removal constitutes unlawful inaction. The wording of subparagraph 69.41.6 of the Tax Code of Ukraine did not stand in the way.

Case Two: A Refusal of Inclusion Can Be Challenged

Limited liability company “P” was not included in the List for the period October 2024 to September 2025. The ground was the existence of a tax assessment notice issued during the last twelve months — even though the offence itself had occurred some five years earlier. The claimant argued that the requirement concerns offences committed within the relevant period rather than the date on which the notice was issued, and that the opposite reading distorts the meaning of the provision.

By judgment of the Kharkiv District Administrative Court of 11 June 2026 in case No. 520/32774/25 the claim was allowed in part. The court declared unlawful the decision of the tax authority not to include the company in the List for that period and ordered the service to reconsider the question of inclusion having regard to the court’s conclusions.

For practice, this judgment is valuable for three conclusions.

First, the court recharacterised the subject matter of the dispute. A refusal of inclusion in the List is not inaction but a decision — an act of the one-off application of legal rules, the effect of which extends to a defined group of persons. The court found the claimant’s legal position as to inaction to be erroneous. The claim must therefore contest a decision rather than seek a declaration that inaction was unlawful.

Second, the appropriate remedy is an order to reconsider the question, not an order to include the taxpayer in the List. The court does not substitute itself for the authority within the bounds of the latter’s discretion.

Third, the request for an order to submit a report on enforcement of the judgment — that is, for judicial supervision under part five of Article 382 of the Code of Administrative Procedure of Ukraine — was refused: the claimant had not established reasonable doubts as to enforcement. That request must be substantiated separately and with evidence, rather than asserted automatically.

Taken together, the two cases mean that legal mechanisms exist to protect both entry into the List and the enjoyment of a status already obtained.

Practical Steps Before Filing

The mechanics of the calculation are set out in Order No. 495 somewhat confusingly, but on the whole sufficiently for a taxpayer to be able to compute its own indicators using the very data relied on by the State Tax Service of Ukraine.

1. Compare the industry indicators. To do so, one may use the open industry analytics resource maintained by the State Tax Service of Ukraine, which shows, by NACE class, the average level of payment of corporate income tax, VAT, taxes to the consolidated budget for the third group, personal income tax, and the average monthly salary — broken down by region and by month.
2. By way of a benchmark: the level of VAT payment is 14.27 per cent for computer programming (class 62.01), 2.80 for the construction of buildings (41.20), 2.04 for growing cereals (01.11) and 1.87 for non-specialised wholesale trade (46.90).
3. Calculate your own level of corporate income tax payment using the formula in Order No. 495, by determining the ratio of the sum of certain lines of the return to line 01, multiplied by one hundred per cent.
4. Verify the salary indicator using Annex 4DF: the sum under income code 101 divided by the number of employees who worked a full month, for each of the twelve months separately. Compare the result with the regional industry average multiplied by 1.1.
5. Check the forms of the tax assessment notices. Order No. 495 specifies that, for the requirement concerning reporting penalties, what is verified is the absence of tax assessment notices of form “PS” for the last twelve months preceding the month in which the List is approved, and for the requirement concerning settlement deadlines on export and import transactions — the absence of tax assessment notices of form “S”.
6. Review the Electronic Cabinet. The indicators calculated for the taxpayer that do not correspond to the average level are placed there. This is a direct list of what fell short.
7. Check VAT riskiness. The existence of a decision confirming compliance with the riskiness criteria, adopted under the procedure established by Resolution of the Cabinet of Ministers of Ukraine No. 1165 of 11 December 2019, closes access to the List irrespective of all other indicators.

The white business club merits attention: reduced periods for VAT refunds, an assigned compliance manager and the right to learn about one’s own tax risks are advantages that, while not radical, are on the whole real.

This is, however, less a status of integrity or an indulgence than the result of a comparison with one’s industry in a specific region against a moving threshold that is recalculated quarterly. One participant in four may lose the status within a single cycle without having done anything unlawful.

At the same time, if the tax authority has erred in reading a requirement, that can be challenged — provided that the claim is framed as contesting a decision and with a correctly chosen remedy.

This material is of an informational nature and does not constitute legal advice in any particular matter. Compliance with the criteria for the List depends on reporting indicators, the industry, the region of registration and the history of interaction with the supervisory authority, and changes quarterly. For the analysis of any individual situation, we recommend seeking a bespoke consultation.