A bill backed by Ukrainian lawmaker Yaroslav Zhelezniak could raise as much as $25 million in tax revenue by legalising the industry, enough to finance around 30,000 drones for Ukraine’s war effort.

Zhelezniak, who chairs the Ukrainian Parliament’s finance committee, has argued that the current legal framework has created an unusual situation in which adult content creators can face prosecution even after declaring and paying taxes on their earnings.

Producing, possessing or distributing pornography remains illegal in Ukraine and can carry a prison sentence of up to seven years.

Despite the restrictions, the adult content industry has continued to grow, with The Wall Street Journal reporting that it has operated partly with the help of corrupt officials and police officers.

The proposed legislation seeks to bring the industry into the legal economy while allowing the government to collect taxes from creators who currently operate in a legally uncertain environment.

Zhelezniak told the Journal that creators were effectively being placed in a difficult position by the existing system.

“These women either don't pay taxes and face criminal charges for that, or they pay taxes and get charged with violating pornography laws,” he said. “It's a tragicomic situation.”

Ukrainian authorities have recently stepped up efforts to collect taxes from adult content creators.

However, declaring income can also draw attention to activities that remain prohibited under the country's pornography laws.

Ukrainian lawmaker Yaroslav Zhelezniak backs the 'porn tax' bill. Photo: Facebook/@zheleznyak.y

According to the Journal, some creators who disclosed their earnings subsequently received letters from authorities in Kyiv accusing them of tax evasion as well as the illegal production of adult content.

The situation has left creators facing a choice between declaring their income and potentially exposing themselves to prosecution, or continuing to operate outside the formal system.

The issue has become more significant as the industry has expanded.

Figures cited by the Journal showed that 7,900 Ukrainians earned more than $131 million through OnlyFans in 2023, based on data from the platform's parent company, Fenix International.

Allegations of police corruption add to uncertainty

The adult entertainment industry had largely operated without significant intervention from Ukrainian authorities before Russia launched its full-scale invasion.

The Journal reported that Ukraine's General Prosecutor's Office recently uncovered cases in which officials in three regions allegedly accepted bribes of up to $20,000.

For some creators, the increased scrutiny has resulted in police searches and criminal proceedings.

OnlyFans creator Svitlana Dvornikova told the Journal that police raided her home one morning while she was preparing her daughter for school.

Officers allegedly seized $20,000 in cash along with her laptop and hard drives.

“They had a list of webcam models, and knew all their addresses,” Dvornikova told the Journal.

She alleged that officers offered her an opportunity to pay a bribe to make the case disappear, but said she refused.

Another woman told the newspaper that police carried out a similar search at her apartment.

She was later summoned to court but did not attend because she feared being pressured to pay a bribe.

The uncertainty has prompted several Ukrainian OnlyFans creators, including Dvornikova, to leave the country or temporarily relocate elsewhere in Europe.

Lawyer calls prosecutions a wartime burden

Lesia Mykhalenko, a tax lawyer who has represented more than 100 OnlyFans creators, said prosecuting adult content creators was an inappropriate use of government resources during wartime.

“This is a victimless crime,” Mykhalenko told the Journal. “It unnecessarily burdens the legal system at a time when we should be focused on defending the country.”

The debate has also reached President Volodymyr Zelenskyy's office.

After authorities launched a criminal case against her, Dvornikova filed a petition that was later published on Zelenskyy's official website.

Describing herself as a “conscientious taxpayer”, she argued that the government should not treat her as a criminal after she had paid nearly $900,000 in taxes.

She claimed that the amount was equivalent to “hundreds of Russians killed on the front line”.

Petition gains support

Dvornikova's petition reportedly attracted more than 25,000 signatures within a week, according to the Journal.

The issue subsequently received attention from Zelenskyy, who said Parliament would consider Zhelezniak's proposal to legalise pornography.

The bill, co-authored by Zhelezniak, passed its first reading in the Ukrainian Parliament in July. It is now awaiting a second reading.

If approved, the proposed reform would mark a significant change in Ukraine's treatment of the adult entertainment industry while potentially creating a new source of tax revenue for a country continuing to spend heavily on its war effort.