However, according to the analysis of world experience, this is not the case.
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However, according to the analysis of world experience, this is not the case.
The main motive for such a replacement was the desire to keep the cumulative tax in the conditions of rapid technological rearmament.
As for the possibilities of applying this type of tax in Ukraine, they are quite insignificant. Take at least such a fact as the traditional sale of consumer goods outside the conventional trade, ie in the markets, which implies the presence of significant volumes of officially unaccounted for sales. The latter, on the one hand, makes the use of retail tax in Ukraine fiscally meaningless, and on the other hand, will encourage the closure or transition of legal entities in the "shadow" sector. In addition, this type of tax is characterized by high administration costs. In practice, the existence of a retail tax will lead to legislative incentives for the "shadow" retail market, increase overhead costs of producers, as well as eliminate the tax conflict that occurs when applying value added tax.
The abolition of value added tax and corporate income tax is also considered impractical based on the following considerations:
1. Both types of taxes are one of the main sources of tax revenue not only in Ukraine but also in most countries. 2. The Verkhovna Rada of Ukraine ratified the "Partnership and Cooperation Agreement between Ukraine and the European Communities and their Member States" of 14 June 1994 [19] [19] (Law of 10 November 1994 No. 237) [16] and thus adopted commitments to further advance through economic reforms to establish free trade zones with these countries. According to Art. 51 of this Agreement "The Parties recognize that an important condition for strengthening economic ties between Ukraine and the Community is the approximation of existing and future legislation of Ukraine with Community law. Ukraine shall take measures to ensure that its legislation is gradually aligned with Community law. "[4, p. 51]. In particular, it is envisaged to ensure the adequacy of tax laws, which means maintaining the value added tax and corporate income tax applied in the European Union. 3. Ukraine has concluded and ratified double taxation agreements with many countries. 4. Value added tax ensures the implementation of a number of tax principles: stability and reliability of budget revenues, neutrality and relatively even distribution of tax pressure between all business entities, regardless of capital, material and labor resources and production costs, universality (single tax rate and a single procedure for determining the tax base), which simplifies the procedure for its calculation and payment, the ability of taxpayers to regulate the amount of its payment by increasing or decreasing the list and volume of goods and services for their own needs … 5. In order to ensure the completeness of the payment of value added tax and simplify the procedure of its administration in Ukraine, a single database of its payers has been created. It also allows the State Tax Administration to clearly and timely control transactions when verifying the accuracy of the declared amounts of value added tax for reimbursement. After all, only those persons who are registered as taxpayers, are under the control of tax authorities and have received tax invoices from enterprises that sold them goods have the personal narrative essay topics right to budget reimbursement.
Proposals for the introduction of a sales tax with the simultaneous abolition of value added tax and corporate income tax, at first glance, are very attractive because it is much easier to administer than value added tax. However, the sales tax has a significant disadvantage – the cumulative effect.
The introduction of the sales tax, according to preliminary calculations, will reduce the competitiveness of Ukrainian goods even if its basic rate is 9% (compared to the current rate of value added tax – 20%).
Particularly negatively, the cumulative nature of this tax will affect those sectors of the economy that produce technologically complex products with a high degree of cooperation and processing, as well as enterprises engaged in assembling finished products from individual components, which, in turn, require multi -stage processing.
At each stage of sales of semi-finished products until the state of full readiness of products, their cost will increase by 9% (excluding compound interest). That is, if six companies will consistently participate in the manufacture of a relatively complex component, its final cost will increase by more than 45% (five stages of 9%). With such an increase in the cost of components, the interest of enterprises in specialization and cooperation is lost, because the enterprise engaged in the assembly of finished products (at the final stage) will not be able to sell such relatively expensive products.
Similar products from its competitors (even at a 20% value added tax rate) will be at least 25% cheaper (excluding compound interest).
Countries with developed market economies have switched from sales tax to value added tax in order to increase the competitiveness of their products and avoid the cumulative effect of taxation.
One of the arguments in favor of the introduction of sales tax is considered to be that the value added tax was introduced by countries with developed market economies, which are characterized by overproduction. However, according to the analysis of world experience, this is not the case. Value added tax was introduced in all Central and Eastern European countries, where, as in Ukraine, until recently the economy was centrally planned (including Bulgaria (since 1992), Hungary (since 1988), Poland). during 1991-1992 pp.), Slovakia (since 1992), Romania (during 1992-1993 pp.), the Czech Republic (since 1992 p.), as well as in all countries of the former USSR, which were and remain the main trading partners of Ukraine. As for the Russian Federation, the sales tax was introduced only for retail trade and at the local level, and the value added tax has been in force at the federal level since 1991.
Other advantages of value added tax over sales tax include the following:
1. The base of application is expanding. Value added tax can be easily applied to goods and services regardless of the nature of the goods or the characteristics of the buyer. Sales tax collection is associated with some difficulties, especially in services and small businesses. 2. Transparency is achieved in the exemption from value added tax, which makes it possible to more clearly separate goods or services purchased by direct consumers (ie for final consumption) from those purchased by producers for further processing and use. Value added tax is levied by the seller under any circumstances, so it is almost impossible to avoid paying it. 3. The work of tax inspections is relatively simplified, which makes it possible to increase revenues to the state budget by increasing the completeness of its collection due to the neutrality of goods and services, as it does not matter for what purposes they are purchased. 4. Greater flexibility in determining prices for export-import goods. The value added tax paid by the exporter is reimbursed to him after his goods cross the border. Similarly, this tax is added to the value of imported goods. When collecting sales tax on export goods, it is almost impossible to determine the amount of compensation. 5. Value added tax is a more effective mechanism for combating tax evasion. In many countries, it is the main source of tax revenue. In France, for example, the share of value added tax is 41.4% of all tax revenues, in the UK – 17, Germany – 28, Denmark – 19%. In Georgia, this figure reaches almost 60%.
06/17/2011
Collection of value added tax in Ukraine: areas for improvement. Abstract
Reforming the tax system in Ukraine in order to adapt it to market conditions began with the introduction of value added tax
The transfer of VAT as a purely market tax to Ukraine’s economy, which was gripped by a deep economic crisis at the end of the last century, led to the fact that it did not fully show its positive qualities, and also caused many negative processes. However, the emergence of certain problems is inevitable when changing management methods and the transition to new forms of taxation.
In addition, the process of formation of value added tax is not yet complete, and the stability in economic growth, which has been observed since 2000, allows us to expect that in these conditions, the main negative features of VAT will be eliminated.
Development of this tax in 1992-2004. characterized by constant changes in laws and regulations in search of the most effective mechanism of taxation in terms of attracting sufficient revenues to the budget and stimulating entrepreneurship.
Among all taxes, VAT is the leader in the number of changes made to legislation that determine the procedure for its application. Although this raises many complaints due to the fact that the work of tax authorities and the planning of entrepreneurs’ activities is complicated, it is impossible to avoid this, as the tax system of Ukraine is under development.
The most important step in bringing domestic VAT closer to the norms adopted in developed countries was the adoption in 1997 of the Law of Ukraine "On Value Added Tax". However, the adoption of this Law did not achieve another important goal – the creation of a favorable tax regime for industrial development, the effects of some provisions of the Law have led in some cases to increased tax pressure on production.
The analysis shows that in Ukraine more attention is paid to the fiscal effect of VAT and insufficient attention is paid to its regulatory function, although each element of the VAT mechanism can be used to ensure a positive regulatory impact of the tax on economic processes.
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