Published since September 1958

№ 12/2020

Ekon Ukr. 2020 (12): 36–55https://doi.org/10.15407/economyukr.2020.12.036

FINANCE. TAXES. CREDIT

УДК 336.221.4.004.14(477)

JEL: E62, H21, H24, H25, H26, H30, H31, K34

¹National Institute for Strategic Studies, Research ID : http://www.researcherid.com/rid/
OrcID ID : https://orcid.org/0000-0002-0174-113X

FUNCTIONAL CAPACITY OF THE TAX SYSTEM OF UKRAINE

The vast majority of scholars have reached a common vision on the fiscal function performance by taxes, in the predominant – on the regulatory (with a division into incentive and deterrent) and to a large extent – on the controlling function. With the change of political cadence and the beginning of COVID-19 quarantine in Ukraine, a number of important tax reforms were launched to de-shadow the economy and establish fairer taxation, which affected all three tax functions.
At the same time, systemic problems regarding the functional capacity of the tax system of Ukraine remain on the agenda. First, the failure of the fiscal function of taxes, which is associated with common schemes of tax avoidance and evasion, namely smuggling and “gray” imports, abuse of the simplified taxation system, wages “in envelopes”, unaccounted cash income without the use of cash registers, the erosion of the tax base in low-tax jurisdictions. Second, the limited potential of the regulatory function of taxes due to the weak effectiveness of existing tax incentives. New tax incentives carry the risks of significant revenue losses in the absence of reliable compensators in the future. Third, low confidence in the control function of taxes due to the weak institutional capacity of tax and customs authorities. Complex tax and customs administration provides ample opportunities for corruption risks. There is no effective system of anticipation and prevention of violations.
Given the significant number of problems in the implementation of all major tax functions in Ukraine, relevant strategic goals and objectives are proposed to strengthen the functional capacity of the domestic tax system, which should be the basis for strategizing its development.

Keywords:tax system of Ukraine; strategizing; tax functions; fiscal function of taxes; tax evasion; regulatory function of taxes; tax incentives; control function of taxes; confidence

Article original in Ukrainian (pp. 36 - 55)

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The article was received by the Editorial staff on November 3 , 2020

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