Ihor Khyzhnyak: "As soon as the moratorium on inspections was cancelled, the tax authorities were already at our place"

Nothing has changed in the country since the President of Ukraine created the Business Support Council and signed a memorandum between the government and entrepreneurs on ensuring favourable conditions for doing business, says Ihor Khyzhnyak. Entrepreneurs suffer from tax pressure and arbitrariness of law enforcement agencies."Today, Comfy has two criminal cases. There is an act for almost 700 million from a scheduled audit that was not completed in 2022. The tax authorities had two weeks to go before the full-scale invasion began. In December, as soon as the president cancelled the moratorium on inspections, the next day at 9 a.m. the tax authorities were already at our place and actually issued an act for more than 700 million.

Now another audit has been released - for five years, from 2015 to 2020 they are checking TP (transfer pricing). In December or January, I don't remember, there were 27 scheduled inspections in stores across the country, where we were issued the same act, as if it were a copycat, which had nothing to do with the Comfy chain. The act concerned the fact that we do not put all the money in the cash register, to put it simply. This is basically impossible, because Comfy does not work with cash and has never worked. And in the smoking room, the tax authorities told our employees that they had to write them out, otherwise they would all go to war," said Ihor Khyzhnyak.

He also added to the list of problems the blocking of tax invoices and the assignment of risky status to his company.

"103 stores, 23% market share, 4,500 employees. We are the only company in the segment that has been operating completely fairly for 15 years, the second largest player in e-commerce according to Forbes, a completely transparent company audited by the Big Four: for a long time it was Deloitte, now it is KPMG. And they assigned the status of a risky company?

As our tax officers from Dnipro say: we got a call from the top, so we gave you the assignment in two hours. We said, 'Okay, we'll go to court and fight back. They said, 'You will be rejected, but in two hours we will re-assigne it,'" describes Igor Khyzhnyak.

During his 15 years of work at Comfy, he remembers such pressure from the security forces only during the presidency of Viktor Yanukovych, the CEO said.

"But there was no war then. While we are sitting here thinking and talking about this issue, people are dying right now, a very large number of people. And the lack of trust [in the authorities] does not help..." said Ihor Khyzhnyak.

However, he clarified that there were no attempts to take over a part of the business or demands for bribes. But he also remembers no dialogue on how to raise money for the budget.

"I want to live in this country. I stayed, I'm building a business, I'm trying to invest in this country, I'm trying to convince the owners that if you give me money, I will consolidate the market and open more stores. And in two years, Comfy paid 2 billion 150 million [hryvnyas] in taxes. This is 170,000 FVP," Khyzhnyak said.

He sees a great demand in society for change, development and growth, despite the war.

"We had a store in Kremenchuk, in the Amstor shopping centre, where a missile hit. 22 people were killed there, 12 of whom were my people, Comfy people. In two weeks I learnt the prayers of all the patriarchates. I've never been to as many funerals in my life as I did in those two weeks. Young boys and girls, 22-24 years old. It was terrible.

For two months, I was wondering whether I should reopen the shop there, restore the business. And then I arrived, gathered the store team and asked: "Guys, girls, are you ready?" They said: "Of course we are. We have a request. And there is no better day than today to show that you are with the city, that you are with the country, that we want to grow."

I think this is a good example of the fact that there is a very big demand for change. And if we don't use it now, if we don't build this dialogue [with the authorities], when will we do it? If we don't lay some foundations for joining the European Union now, because it doesn't really depend on them, but on whether we adopt civilised rules, when will we do it?" the businessman said.

In addition, he offered the Ministry of Economy, represented by its head Yuliya Svyrydenko, his help in increasing the amount of taxes paid in his industry by almost ten times.

"If you remember, we met at a conference (addressing Yuliya Svyrydenko), and I suggested that we divide the hall into two parts and that one group should go to the left side of the main street of the country, and the other to the right and buy devices such as Apple smartphones. Why Apple? Because the information is easy to verify. Today, 75% of devices of one brand - I'm talking only about Apple smartphones - are imported into the country in the black.

In three years, this is very easy to check, because there is an IMEI and activation by IMEI.

And we know all the IMEIs that were imported in a white way... Over three years, this is 10 billion hryvnyas in underpaid taxes from one device. This is 700,000 FVP. I talked about this at the end of last year.

Just before our meeting, I went for a drive down Khreshchatyk and bought three different devices - Apple headphones, a Xiaomi power bank, and another Marshall headphones. These were different stores, big and small. I won't name them so as not to offend anyone and to be correct... But I received nothing again. I received an expenditure invoice, a piece of paper with a stamp, a Viber receipt, but not a fiscal receipt. On the main street of the country, more than 20 stores continue to sell a bunch of devices. And this is about trust, this is about dialogue," said Igor Khyzhnyak and summed up that he was ready to help change the situation for the better.