Kharkiv sees rise in private entrepreneurs despite war, backed by effective tax incentives - Terekhov
The decision of Kharkiv City Council to exempt entrepreneurs from paying local taxes and fees has justified itself, believes the city mayor, head of the Association of Frontline Cities and Communities Ihor Terekhov.
"Thanks to this mechanism, there are now 127,000 private entrepreneurs in Kharkiv. Before the start of the full-scale invasion, there were only 120,000. This indicates that our decision has fully justified itself," Terekhov said in an exclusive interview with the Interfax-Ukraine news agency.
According to him, since April 2024, when the decision on tax benefits for businesses was first adopted, losses to the city budget have amounted to about UAH 2 billion, but the resulting social and economic effect has been significantly greater.
"We clearly understood that supporting business is an investment in the city’s stability, in preserving the economy and jobs. Thanks to our decision, businesses were able to retain working capital and channel it into operations, pay wages, continue working, and at least minimally invest in recovery. In other words, we achieved a social effect no less important than the economic one. Because people keep their jobs and income, and therefore the ability to remain living in the city rather than leave in search of a better future… The effectiveness of this decision is also evidenced by the scaling of our initiative to other frontline communities. Zaporizhia and Sumy have taken this path, and Mykolaiv is considering such a prospect," Terekhov said.
He also noted that other business support mechanisms are in place in Kharkiv as well.
"A mechanism for partial compensation of interest rates for small and medium-sized businesses is already in place, covering up to 50% of interest on loans in the national currency in amounts of up to UAH 300 million for a term of up to five years. This is one of the few investment instruments that entrepreneurs actually use. But many more such instruments are needed. In addition, a business hub operates in Kharkiv on the basis of one of the Administrative Service Centers. It serves as a single service entry point for business, where entrepreneurs can receive consultations on registration, business operations, access to grant programs, and participation in state, international investment, and other financial programs without excessive bureaucracy, which is very important," Terekhov said.
According to him, voucher-based support for the participation of local manufacturers in exhibition and trade fair events in Ukraine and abroad will be launched in 2026, helping to promote Kharkiv products in new markets. In addition, a mechanism to support veteran entrepreneurship is currently under development.
"In other words, our approach is very simple. In a frontline city, we cannot afford declarative business support programs. What is needed are real, working instruments. Only then will businesses stay. At the level of the Association of Frontline Cities and Communities, we constantly talk about systemic solutions. As I have already said, businesses in frontline regions operate in conditions where standard market instruments do not work. Therefore, special mechanisms are needed. These are, first and foremost, war risk insurance, affordable loans, grants for launching and developing businesses, and compensation for affected entrepreneurs. Supporting frontline businesses is not charity, but a thoroughly pragmatic strategy," Terekhov concluded.