In Ukraine It’s Easier to Run a Business Than Start One

Ukraine ranks second in overall business-friendliness among six other countries in Europe, according to a Ukrainian Institute of Economic Research and Policy Consulting (IER) report based on Bureaucracy Index 2024. Ongoing administrative work, however, takes less time than in Slovakia, Hungary, Czech Republic and Georgia. 

In Ukraine, it is easier to run an existing business rather than to open one ex novo, according to a recent survey.

In 2024, Ukraine had one of the highest bureaucratic burdens for businesses in Europe, a process for opening a small and medium-sized enterprises (SME) that takes 64 to 79 hours, compared to 19 to 24 hours in Poland, 

The time required to start a business in Ukraine varies depending on the industry. Opening an industrial SME takes 64 hours, the highest among surveyed countries, while Poland leads with just 19 hours. Other countries fall within the range of 37 to 46 hours, according to the research. 

Meanwhile, opening a small hotel in Ukraine is more time-consuming, taking 79 hours. The fastest process, at 24 hours, is again offered in Poland. In most other countries, the time needed to start a hotel is closer to Ukraine’s, primarily due to strict hygiene regulations, the Bureaucracy Index 2024 shows.

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When it comes to “business operations,” Ukraine ranked among the best, second only to Poland, according to the Bureaucracy Index. The annual administrative burden for operating industrial SMEs in Ukraine reaches 192 hours. In Poland, it was 148 hours, while Slovakia had the highest burden at 272 hours. In Hungary and the Czech Republic the time was 230 hours, in Georgia – 211. 

But in Ukraine the bureaucratic workload for running a hotel took 200 hours per year, the second-best result. In Slovakia, the figure was 264 hours. Meanwhile, the rankings of Georgia and the Czech Republic switched places compared to the industrial sector, according to the Bureaucracy Index study. 

Key challenges for doing business in Ukraine

The most time-consuming regulatory procedures in Ukraine are related to workforce management, accounting for 40% of administrative costs. In the Czech Republic and Poland, operational management presents the greatest challenge. 

In Ukraine, it accounts for 22% of administrative time, according to the Bureaucracy Index 2024. The country also stands out for its high time involved in statistical reporting and adapting to legislative changes.

Ukraine recorded the highest number of legislative changes among the surveyed countries – 35 in a single year, compared to 7 in Georgia and the Czech Republic, and 16 in Slovakia, second in the list. 

This significantly increased the bureaucratic burden on businesses. The most affected areas were corporate taxation, labor laws, and commercial regulations, IER experts wrote.

Overall, Ukraine ranked second after Poland in terms of business-friendliness. The ranking considered the average time required to start and operate a hotel or an industrial SME. Slovakia, Hungary, and Georgia were identified as the most challenging countries for businesses, the Bureaucracy Index 2024 shows.

Ukrainian businesses have been struggling with unsafe working conditions and a lack of employees, IER research reveals. From January 2024, these became the primary challenges, even in areas less affected by Russia’s missile attacks, Chief Executive of the IER Oksana Kuziakiv told Kyiv Post.