According to the Ukrainian tax agency, some $21.26 billion in salaries annually are paid under the table in cash—so-called “envelope salaries”—accounting for almost half of the country’s shadow economy. The Ukrainian government has been looking for ways to capture the lost taxes for many years, but has never succeeded.
Prime Minister Mykola Azarov recently stated that out of 20.5 million employable Ukrainians, almost 6 million—about 29 percent—are working unofficially.
If envelope salaries were normalized, the state would earn an additional $11 billion to $12 billion annually, or about 7 percent of the country’s GDP, according to calculations based on available figures.
