Hundreds of millions in taxes at risk: why Ukraine cannot afford to lose its aviation industry
Kyiv • UNN
Ukraine's aviation industry paid a record UAH 702 million in taxes in 2025, despite the closed sky. Due to criminal cases by the Bureau of Economic Security (BEB) regarding aircraft leasing and a decline in profitability, businesses risk leaving Ukrainian jurisdiction.
The Ukrainian aviation industry, which even under the conditions of a full-scale war continues to pay hundreds of millions of hryvnias in taxes and retain highly qualified personnel, has come under pressure, and the question of its survival arises. If the practice of criminal prosecution of airlines and attempts at additional fiscal burden continue, part of the business may finally leave the Ukrainian market. The consequence will be not only the loss of significant contributions to the budget, but also the weakening of one of the industries capable of becoming a driver of Ukraine's post-war economic recovery, writes UNN.
Record taxes despite the closed sky
Since the beginning of Russia's full-scale invasion, the Ukrainian sky has remained closed for civil aviation. However, airlines have managed to adapt to the new working conditions - most operators were forced to relocate their activities abroad, refocus on international markets, perform specialized aviation work, carry out humanitarian missions, cargo transportation, and other areas of activity.
At the same time, the industry continued to operate under Ukrainian jurisdiction and pay taxes to the budget. According to the State Tax Service of Ukraine, in 2025, aviation industry enterprises transferred over UAH 702 million in taxes to the budget. This is the highest figure in the last eight years. Interestingly, the largest tax revenues came from companies engaged in passenger transportation, which once again proves that the civil aviation industry is alive, although planes are not yet flying over Ukraine.
In conditions of significant strain on public finances due to defense expenditures, nearly a billion hryvnias in taxes is of particular importance. The loss of even part of these funds would be an additional blow to the budget, which operates in a constant deficit mode, while the Government seeks additional sources of funding and asks for help from international partners.
The industry is losing profitability
High tax revenues do not mean that airlines are going through a successful period. On the contrary, the financial indicators of 16 Ukrainian air carriers over the past 5 years indicate a gradual deterioration of the situation in the sector.
An analysis of the financial statements of market participants shows that a significant portion of companies have been operating at a loss for the fourth consecutive year. Even those air carriers that still manage to remain profitable are showing a rapid decline in profitability and margins.
The reasons for the decline are obvious: the closure of Ukrainian airspace, the need to relocate personnel and fleet, rising operating costs, difficulties in working on international markets, and general economic instability.
Despite this, companies continue to retain staff, maintain flight and technical personnel, support certification, and fulfill their obligations to the state. In addition, private aircraft manufacturing enterprises remain operating in Ukraine, currently focused on repairing military equipment. They are being sustained through government contracts as well as financial injections from airlines.
That is why any additional pressure on the industry, whether fiscal or criminal, is significantly more dangerous today than it was a few years ago. If earlier enterprises could compensate for such risks due to profitability, now many are operating with a minimal margin of financial safety.
Pressure from the BES increases risks
Particular concern is raised by the situation surrounding criminal proceedings initiated against a number of Ukrainian airlines that use international leasing of aircraft.
Companies operating under mechanisms that have been used for decades in the global aviation industry have come under pressure. The Bureau of Economic Security is attempting to interpret payments for aircraft leasing to non-residents of Ukraine as royalties, which has become the basis for opening criminal cases. Due to this approach of the law enforcement agency to interpreting the lease of transport as the use of intellectual property, at least 5 airlines have suffered, including UIA, "Constanta Airlines", "Urga", N3Operations, and "Skyline".
Lawyers, tax consultants, and attorneys interviewed by UNN have repeatedly emphasized that this position contradicts international conventions on the avoidance of double taxation, provisions of the Tax Code, and established judicial practice. Moreover, the fact that Ukrainian tax legislation regarding the leasing of aircraft has not changed in the last 30 years leads to conclusions about deliberate pressure on business by the Bureau of Economic Security. After all, claims against the activities of several airlines at once arose among law enforcement officers only after 2024, although nothing changed in the operations of the enterprises.
According to experts, the problem extends far beyond individual criminal proceedings. For businesses that have been operating under extraordinary conditions for the fifth year, additional criminal risks could become the final argument in favor of completely relocating activities to other jurisdictions.
The loss of aviation will hinder economic growth
Further pressure on the aviation industry could cost the state significantly more than it seems at first glance. If airlines leave Ukrainian jurisdiction, the budget will lose hundreds of millions of hryvnias in tax revenues, but this is not even the most dangerous consequence. Ukraine risks losing thousands of highly qualified specialists: pilots, engineers, technicians, designers, and other professionals, whose training requires many years and significant resources.
Along with air carriers, related areas will come under attack – aircraft repair, aircraft maintenance, logistics, personnel training, and other segments that form a single aviation ecosystem. The loss of such competencies is especially dangerous given that civil aviation is considered by economic experts as one of the biggest drivers of Ukraine's post-war recovery, after the agro-industrial complex.
The aviation sector is one of the areas where Ukraine can restore and further develop its leading positions in the global economy. If we speak figuratively, in principle, the key directions, key areas of development of the Ukrainian economy are clearly reflected on the Ukrainian state flag. That is, the blue color is the sky, and what is the sky – it is the aerospace sector, and what is the wheat field – it is the agricultural sector
The aviation industry has a powerful multiplier effect on the economy, stimulating the development of tourism, international trade, transport infrastructure, service industries, and high-tech manufacturing. The resumption of operations at Ukrainian airports after the end of the war will be one of the key signals for international investors about the country's return to normal economic life.