2rd-year student, sp. “Customs Affairs”, d/d, Scientific Advisor – Stupak M.H., Chernivtsi Trade and Economics Institute of KNTEU, Chernivtsi
THE INFLUENCE OF TAX SYSTEM ON BUSINESS EFFICIENCY IN UKRAINE
The Ukrainian Tax System has developed radically since Ukrainian independence until the present. The first major reform to the tax system was undertaken in 1997 with the main aim of increasing budget revenues, primarily by reducing the number of tax exemptions and simplifying and streamlining compliance procedures. However, this reform did not tackle the key problem, which was and remains the extremely high tax burden placed on business and individuals. Tax system aims at allowing the government to fulfill its obligations in the framework of overall fiscal policy by generating necessary revenue as efficiently, equitably, neutrally, and manageably as possible. But government often wishes to address also some specific economic and social objectives, like enhancement of employment, investment, or exports. The development of particular country region or sector of the economy may also be the government’s intention. It is believed that the achievement of these objectives will lead to faster growth or improvements in social stability. In order to achieve these objectives government instead of direct intervention may resort to various fiscal incentives to influence the private sector toward behavior consistent with these aims. It is to encourage the private sector by reducing costs and by making activities more profitable. Aspects connected with tax assessment and optimizing taxes in Ukraine are rather complicated. Taking into account inconsistency of Ukrainian tax laws even specialists with a great work experience and tax consultants are at loss how to answer some questions without an intensive study of legal framework and numerous explanations of some problems by official bodies, without practice tax arbitrage. It is very important to find an optimal solution of a problem that will allow executing legal operations with minimal tax losses. But having a good approach to solving tax disputes and all-around study of the question, we can consider inconsistency of Ukrainian tax laws as a positive factor that weaken tax pressure on an enterprise. The act of Ukraine concerning the tax system determines the main taxation principles in Ukraine, taxes and fees (obligatory payments) to budget and extra budgetary trust funds as well as rights, duties and responsibilities of tax payers. According to it, national taxes and fees include: VAT, corporate income tax, natural person income tax, excise tax, rental payment, land fees, vehicle owners tax, special taxes, fees to salary fund for mandatory insurance etc. Local taxes and fees include: advertisement tax, community tax, fee for the right of local symbols usage, fee for the right of holding a local auction, permit fee for location of sales and service facilities etc. Starting business in Ukraine it is of great importance to make a right choice of tax system. A serious approach to this issue will allow forming a proper tax policy of an enterprise from the very beginning. Ukrainian legal system contains several ways of taxpaying: common system of taxation, simplified tax system (single tax), fixed agricultural tax and special trade patent. A right choice of taxpaying way influences business efficiency and profit margin an enterprise may have. In conclusion, we may say that the process of reforming the tax system will only be completed when the entire tax system in Ukraine is reviewed, analyzed, improved and modified. It is also clear that the general trend is to make the tax system more investor-friendly, to reduce the tax burden placed on business and individuals, streamline the compliance process and introduce tax principles and concepts used in more developed tax systems. Selected bibliography: 1. http://juveko.com.ua/enprofitstax/ 2. http://newbiznet.com.ua/index.php/en/taxes 3. http://www.mfa.gov.ua/main/en/5291.htm
