How Not to Lose the Status of a Critical Enterprise
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For enterprises that have obtained a critically important status, government audits are not just a formality — they are a real assessment of whether the company continues to meet the required criteria and maintain its advantages. Every document, certificate, and performance indicator can be decisive. Even a small reporting error or an expired certificate may lead to losing the status, along with all the negative consequences for the business.
In this article, we explain what exactly is checked during audits, which risks may result in the loss of status, and how to prepare properly to protect your business. And if you need professional legal support, our team can help you undergo the review confidently and with minimal risk.
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What Authorities Check During a Review of a Critically Important Enterprise
During a review of a company’s “critically important enterprise” status, the supervisory authority examines whether the business truly continues to meet the criteria on the basis of which the status was granted. In addition, the entire period during which the status has been held is analyzed to determine whether any violations occurred.
According to Cabinet Resolution No. 76 of January 27, 2023, which sets out the “Criteria and procedure for determining enterprises, institutions, and organizations that are critically important…”, the authority that granted the status is responsible for monitoring the activities of such enterprises and, when necessary, conducting a full compliance review to verify that all criteria are being met.
During a compliance review, authorities typically examine:
- Taxes, fees, and social contributions.
Authorities verify whether the enterprise has paid all taxes, mandatory fees, and the unified social contribution, and whether there are any outstanding tax or social payment debts. - Foreign currency revenue (export activity).
If the company qualified for the status based on foreign economic activity, auditors check the volume of foreign currency receipts (excluding loans/credit funds) for the reporting year, confirmed by bank statements. - Average employee salary.
Officials review the formula and data used to calculate the company’s average wage: financial reports, payroll records, accounting documentation, and related calculations. - Territorial presence.
Authorities check whether the enterprise physically operates in the declared regions or sectors, and whether it has appropriate real estate or production facilities, including confirmed lease or ownership documents. - Compliance with industry-specific or regional criteria set by government bodies.
Since the government and ministries may establish additional criteria for certain sectors or regions (subject to approval by the Ministry of Economy and the Ministry of Defense), auditors check whether the enterprise meets these specialized requirements. - Fulfillment of obligations associated with the status.
If the status imposes specific duties (for example, fulfilling a defense contract), compliance with these obligations is reviewed. - Military registration record-keeping.
Auditors verify whether a responsible officer has been appointed, whether all required reports and notifications have been submitted, whether employee data has been updated in the Reserve+ system, and whether all military-liable employees are properly registered with the Territorial Recruitment and Social Support Centers.
If the review identifies non-compliance with the established criteria or failure to meet required obligations, the supervisory authority has legal grounds to revoke the enterprise’s critically important status.
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When Can an Enterprise Lose Its Critically Important Status?
Maintaining the status of a critically important enterprise requires continuous compliance with the criteria established by the government. The most common reasons why a business may lose this status include:
- Financial violations. Tax debt, non-payment of the unified social contribution (USC), or failure to meet other financial obligations are among the primary grounds for revoking the status.
- Declining economic indicators. If tax payments, export-related foreign currency revenue, or the average employee salary fall below the minimum thresholds set by the government, the enterprise automatically ceases to meet the required criteria.
- Mismatch in business activity profile. Changes to the company’s core business activity, reorganization, or liquidation may indicate that there is no longer a basis for maintaining the status.
- Violation of special conditions. For enterprises that received their status based on sector-specific or defense-related criteria, failure to meet the associated obligations, such as delays in fulfilling a defense order or maintaining critical infrastructure, may lead to the loss of status.
- Initiative of supervisory authorities. If violations are identified during audits or ongoing monitoring, state authorities may initiate a review and revoke the status, even if the enterprise is formally attempting to maintain compliance.
In other words, the risks of losing status arise not only from objective declines in performance but also from organizational shortcomings: improper document management, lack of internal oversight, or delayed communication with government authorities.
Please note! To avoid such consequences, companies should regularly conduct internal audits and keep all supporting documentation in proper order.
Successful case: Reserving IT Specialists and Obtaining the Diia.City Tax Benefit
How to Prepare for a Review of a Critically Important Enterprise
To maintain a critically important status and pass an audit without unnecessary risks, we recommend a systematic, well-documented approach. Here are the practical steps we advise our clients to take:
- Conduct an internal financial audit.
Review all tax reports and unified social contribution payments. Ensure there are no outstanding debts or overdue payments. - Update all certificates and confirmations.
Check the validity of bank statements and contracts. Gather documents that confirm your key indicators: export volumes, production levels, average salary, and other critical metrics. - Review HR documentation and military registration compliance.
Prepare employee lists and payroll confirmations. Ensure all records match between HR and accounting documents and that military registration requirements are met for every eligible employee. - Document the company’s actual activities.
Prepare work completion reports, contracts with counterparties, and production records. - Strengthen internal controls.
Assign responsible individuals for document preparation and verify the accuracy of all information. - Engage legal support.
During an audit, having a lawyer ensures that inspector requests are handled properly and that all required documents are prepared in full and submitted correctly.
Following these recommendations significantly reduces the risk of losing a critically important status. However, even thorough preparation cannot guarantee complete protection. That is why an effective strategy includes not only meticulous documentation but also professional legal support from experts who understand the nuances of audits conducted on critically important enterprises.
How We Help Preserve Critically Important Status
During an audit, every detail matters, including numbers in reports, expiration dates on certificates, and even the wording in internal documents. Our experience shows that most companies lose their status not because they fail to meet the criteria, but because they lack a systematic approach to preparation.
We help our clients undergo the review confidently and without the risk of losing their status.
- Conducting a preventive document audit – we identify potential risks before the supervisory authority notices them.
- Preparing a strong evidence base – we compile a complete, properly structured document package that confirms each criterion for a critically important status.
- Managing communication with government authorities – we respond to official requests, prepare explanations, and minimize risks related to direct interactions with inspectors.
Our approach is based not on templates, but on practical experience supporting companies that have already undergone audits and retained their status without remarks.
If your business is critically important, it must be protected professionally. Contact us, and the Pravova Dopomoga team will provide legal support that ensures a positive outcome and peace of mind for management throughout the audit process.
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