Business during the war: for which Ukrainian cities it is important to preserve industrial enterprises

The full-scale Russian aggression has caused significant damage to the Ukrainian industry. A large number of enterprises ended up in the temporarily occupied territories, were destroyed, ceased operations due to the inability to adapt to the new realities, and moved production to other regions of Ukraine. In such a situation, especially for small towns, it was important to preserve their existing industry so that local budgets would not lose taxes and community residents would be provided with jobs, UNN writes.

As of the beginning of 2024, since the full-scale Russian invasion of Ukraine, the assets of more than 400 Ukrainian large and medium-sized enterprises have been damaged or destroyed, according to the Kyiv School of Economics. Total direct losses are estimated at more than $13 billion.

However, experts note that these are only indicative figures, and the actual number of destroyed industrial facilities and the amount of damage is much higher.

Many companies that lost their assets were unable to recover and were forced to cease operations. It is not only industrial enterprises, but also the agricultural sector, which is an important tax base for many communities.

According to a study by YouControl.Market, almost 1,300 agricultural enterprises closed in Ukraine between 2022 and the first quarter of 2024, usually registered in small towns or villages. This, of course, has a direct impact on the reduction of revenues to the budgets of these communities, in particular, due to a decrease in the payment of personal income tax. This, in turn, affects the tax capacity of some communities. Thus, while in 2021, 75% of communities received a basic subsidy, in 2023 their number increased to 84%.

Of course, the impact of the war on industry and business in different regions of Ukraine is difficult to reduce to a common denominator.

For example, economist Oleh Pendzin says that communities in the western regions are in a better position due to the relocation of enterprises.

The territorial split is very significant. The relocation took place from the East to the West. That is, while the situation in the East is much worse in reality, Western Ukraine has definitely received a fairly large number of IDPs, and many businesses that have moved - From this point of view, the structure of local taxes has moved to Western Ukraine. In our country, it has always been like this: industrial centers with well-developed large volumes of local taxes in Kharkiv, Zaporizhzhia, and Dnipro regions. Now the situation has changed radically: the regions I'm talking about are definitely suffering from shelling today. Sumy, Chernihiv, Poltava, and Kyiv regions can be partially added to the list

Despite the different situations in the regions, taxes to the budget and job preservation are among the top priorities for local community leaders.

Of course, a lot depends on the owners and directors of enterprises, because even in the currently relatively calm regions, businesses had to adapt to working in the language of war. 

This path, in particular, was taken by Brovafrma from Brovary, which is one of the largest producers of veterinary medicines in Ukraine. And it began when the Russian occupiers were standing near the city.  

Literally three to five kilometers from us, there were active hostilities. Of course, at first, like everyone else, people were in a kind of shock. Many people left, many were confused. Over time, we adapted. We ensured uninterrupted operation

The mayor of Brovary, Ihor Sapozhko, notes that the city's priority has been and remains the preservation and normal operation of business.

We have always been and still are concerned with keeping businesses in the city running, with enterprises producing their products, and with creating new working cities. We are in constant contact with managers and owners of enterprises, discussing all problematic issues and jointly looking for solutions

In turn, Andriy Sydelnikov adds. "This is how interaction with the city authorities of Brovary makes business more socially responsible.

Businesses feel comfortable working in the community, and accordingly, they try to develop and increase business activity in the community. The community receives taxes to the local budget from the payroll fund

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