Oleksii Khomchak, KNEU
The formation of the tax system in our country began with the adoption on June 25, 1991 of the Law of Ukraine “About Taxation”. This Law defined the principles of construction and purpose of the taxation system, gave a list of taxes, fees, named taxpayers and objects of taxation. Thus, the foundations of the taxation system were laid, the preconditions for its further development were created.
“A tax is an economic category that determines the set of relations between the state and members of society regarding the non-equivalent withdrawal and appropriation of part of the state’s income to perform its functions.”
Ukraine has a constitutional obligation to pay taxes and fees in the manner and amount determined by law, and stipulates that the tax system is established exclusively through the adoption of relevant laws.
Analysis of the modern tax system in Ukraine, its formation and development allows us to conclude about the serious shortcomings inherent in it.
First, it is the instability of the tax system. Frequent changes in the laws on certain taxes have a negative impact on the development of economic entities, do not allow companies to function properly, introduce new technologies and produce competitive products.
Secondly, the system as a whole is too cumbersome, and the calculation of individual taxes is unnecessarily complicated. Today, there are about 2,500 regulations in the field of taxation. Of course, it is very difficult for taxpayers to work without conflicts and with comfort in such a confusing legal environment.
Third, the presence of a significant number of conflicts in tax law. Without solving this problem, tax reform will not be successful, even if other aspects are successful.
In addition, the tax system of Ukraine as a set of relations between the state and taxpayers is characterized by the following negative features:
• fiscal orientation of the tax policy of the state, ie without due consideration of the solvency of taxpayers, attempts to make the most of their available tax potential;
• different approach of the state to the categories of payers, which is manifested in the provision of one of them many unjustified benefits in writing off and restructuring their debt to the budget and shifting the tax burden to others, which indicates the discriminatory nature of taxation in Ukraine.
An example is the permanent write-off of the tax debt of NJSC Naftogaz and its subsidiaries. Such actions of the state “reflect” in conscientious taxpayers any desire to pay taxes and force them to constantly look for schemes of tax evasion. But, in most cases, it is not necessary to see in such actions payers of criminal intentions, most likely it should be considered as a dead end;
• lack of equivalence in relations not only between the state and individual taxpayers, but also between the state and taxpayers in general due to significant waste and embezzlement of public funds, leading to a significant discrepancy between the total amount of tax payments and the public goods provided to taxpayers.
The main disadvantage is also that the existing tax system suppresses entrepreneurship. Today in Ukraine, in accordance with the Law of Ukraine “On Taxation”, there are 42 taxes and fees.
In case of conscientious payment of all these taxes and fees, the company is obliged to transfer to the budget 45-50% of the value added created on it. Even developed countries with a stable socio-economic situation do not have this level and, as a rule, lead to low rates of economic growth.
Ukrainian companies, unlike Western ones, have to adapt to changes in property relations, master the principles of corporate governance, and adapt to competition. Given the existence of an unfavorable tax regime, this is unlikely, which is confirmed by domestic practice.
In addition, the large number of taxes and numerous budgetary and extra-budgetary trust funds significantly complicates the payment of taxes and fees, control over their payment and reporting forms. Such a cumbersome system creates significant obstacles directly for taxpayers.
All these problems indicate the imperfection and inefficiency of the current tax system, that it contributes to the deepening economic crisis. There is a need for tax reform and the creation of a single systematized legislative act of direct action, which will cover all issues of tax law without exception and will meet the adequate principles of tax policy of the state.
At the same time, the problem of building an effective tax system is one of the most pressing problems in the process of establishing market relations in Ukraine and laying the foundations for economic growth. The problems associated with the inefficiency of the tax system have become even more acute in the context of the global economic crisis that began in 2008.
Ensuring sustainable dynamic socio-economic development of the country, increasing employment and increasing the welfare of its citizens is the main task of any state. But to achieve this goal in today’s market economy, it is necessary to create an economic environment for the operation of large, medium and small enterprises, as well as the work of every citizen, under which they would receive incentives for proactive, highly productive and efficient work.
An important place in the formation of such an environment is the country’s tax system.
At the same time, when determining the level of tax burden on business entities, legislators need to take into account that the optimal structure of the national economy involves the mutual functioning of large and small businesses.
The economic interests of large enterprises encourage them to abandon certain activities and small-scale production, which are inefficient for them. In this case, the functions of producing products that are inefficient for large business, carrying out trade operations and providing various services to both the population and the same large business are taken over by small businesses.
In addition, it should be borne in mind that entrepreneurship is often the first job for graduates of higher and secondary education and, consequently, the opportunity to gain practical experience in market economy management and workforce management.
Therefore, the issue of building an optimal taxation system in Ukraine is constantly in the field of view of leading domestic scientists.
Moreover, the works of most scholars note the imperfection of taxes levied in Ukraine, the complexity of their administration, the negative impact on the development of the national economy and the uncompetitiveness of Ukrainian products in international markets.
In order to start a business in Ukraine, it is necessary not only to go through the procedure of state registration, but also to be registered in the local branches of the State Tax Service and to pay taxes to the state budget on a permanent basis. Entrepreneurs in Ukraine can be registered in two forms: as a natural person-entrepreneur or as a legal entity.
It is not enough to come up with a business, it still needs to be implemented. At what it is profitable to realize.
Initially, this means making many administrative decisions in selecting the target audience, suppliers, employees, office and many other issues.
However, one of the primary issues is the choice of taxation system of the company or entrepreneur.
Taxes in Ukraine for small businesses are regulated by the Tax Code. According to it, business entities can independently choose the tax regime: general or special (under the simplified system).
The general system of taxation is chosen by legal entities regardless of the type of activity, the amount of annual income or the number of employees – the choice of system is not limited by any criteria. In this case, the tax is levied on the net income of the entrepreneur and is a percentage of profits.
A simplified taxation system exists to reduce the tax burden and stimulate the development of small business in Ukraine. Within its limits, individual payments are replaced by a single tax, the amount of which may be fixed or fluctuate depending on income.
In addition, a special reporting regime is applied to the simplified taxation system, which also makes life easier for the entrepreneur. Unfortunately, one wish is not enough to become a single tax payer.
You must meet a number of mandatory criteria:
• be a resident of Ukraine
• not have a debt to the state
• engage in only those business activities that are required by law
• meet the standards of one of the four groups of the single tax.
The general system of business taxation provides for the payment of the following taxes:
• personal income tax – 18% of income
• military tax – 1.5% of income
If the business does not make a profit or creates only losses, these taxes do not need to be paid.
• the only social contribution that is not included in the general taxation system, but is also a mandatory payment – 22% of income (but may not be less than 22% of the minimum wage) If the amount of revenue for the reporting year exceeds one million hryvnias, we additionally charge you the payment of value added tax (VAT). If the amount of revenue does not exceed the specified amount, you have the right not to pay VAT at all, or to pay it on a voluntary basis.
The special taxation system for sole proprietors is divided into four groups, each of which differs by type of activity, annual income limit and restrictions on the number of employees (Art. 291.4. Tax Code of Ukraine).
• persons who work independently without the right to hire staff and are engaged in retail sales in the markets or provide household services
• annual income limit – up to UAH 1000000,00 per year
• the tax for this group is up to 10% of the subsistence level (up to 192.10 UAH in 2019)
• number, number of employees, of which there are not more than 10, who provide services, production, sale of goods, restaurant business
• annual income limit – up to UAH 5000000,00 per year
• the tax for this group is up to 20% of the minimum wage (up to UAH 834.60 in 2019).
• those persons who are engaged in any type of economic activity that is not expressly prohibited by single tax payers
• annual income does not exceed 7 million hryvnias per year
• the number of employees is not limited
• data for this group are not fixed in contrast to the 1st and 2nd groups and are 3% of income for VAT payers and 5% of income for non-VAT payers
• quantitative payers of the fixed agricultural tax, for which a separate 4th group of the single tax has been increased since 2015
• agricultural producers, whose share of production per year is more than 75%
• without restrictions on the income of facilities or several employees
• the amount of tax for this group depending on the category of land owned by entrepreneurs and their location
In addition to the single tax, all groups of applications are both linked by a change in the single social contribution (SSC), which should not participate in the general taxation system, but is an important obligation to pay. The amount of SSC is 22% of the minimum wage.
Legal entities that form the general system of taxation pay only data on the profits of enterprises for the following publications:
• Basic rate – 18% of income
• Special rate – 0% or 3% of income (for insurers depending on the type of insurance)
The activities of bookmakers, the issuance and conduct of lotteries are governed by separate rates.
The widespread taxation system reveals more simple data accounting rules and less risk of surprise checks than the general system, the more attractive it is for taxpayers.
All legal entities under the simplified taxation system are automatically connected to the third group of single tax payers.
Wallpapers to pay for:
• basic rate – 5% of aid turnover
• if the legal entity is a voluntary VAT payer – 3% of the turnover.
The amount of annual viral infection for legal entities in the simplified taxation system may not exceed 5 million hryvnias.
The main nuance of working on a simplified system is the need to keep a book of income / expenses. Also, taxpayers in the simplified taxation system often support the identification method of payment, which in most cases requires the use of RRO.
The general taxation system in Ukraine is the most common among sellers of goods and enterprises, with more than 7 million per year.
To calculate taxes, you need to get a full input of income and use the costs incurred to obtain this income. Income is the sale of goods / services, costs – the purchase or production of own funds and the amount of other costs incurred by the economy. And after that, as you determine the income, cancel the costs = from this amount you need to pay 18% of the income tax. We do not forget about VAT and not having in mind other features of accounting.
On the general system there can be a sole proprietorship with income up to 1 million, which are not VAT payers. But after reviewing this amount, they are linked to statistical platforms.
Problems of determining the optimal level of tax burden have been troubling Ukraine since the first years after independence. After the collapse of the Soviet Union in 1991 and the management of user interaction between domestic enterprises and their quantitative partners, which have been described in various independent countries, the Consolidated Budgets of Ukraine have declined sharply.
Under such conditions, the legislation was forced to increase the rates of basic data. For example, in 1992-1994, the value added tax (VAT) rate in Ukraine was 28% and was associated with the highest in the world. At the same time, at the beginning of the interaction of the twentieth century in Ukraine, the total rate of social contributions increased sharply. If in 1982-1990 the norms of social deviations did not exceed 14% of the wage bill, then in 1991 it increased to 37%.
However, this did not improve, but, on the contrary, worsened the economic situation in the country. Therefore, reporting that with such a tax burden (over 50% in 1992-1994) the company does not provide reimbursement of production, the integrated indicator is a gross domestic product, approval of legislation on the gradual reduction of interest rates from 42.5 to 37.0% ; VAT – from 28 to 20%; corporate income tax – from 30 to 25%.
The reduction of the tax burden on business entities contributed to the dynamic socio-economic development of Ukraine in 2000–2007, in comparison with which there was insufficient to attract reviews in the 2008–2009 crisis years and ensure stable development of the national economy in the post-crisis period.
Therefore, in 2010, adopting the new Tax Code of Ukraine, legislators provided for a reduction in VAT rates and a gradual reduction in the corporate income tax rate from January 1, 2014, respectively, to 17 and 16%.
These are, without a doubt, progressive norms. However, they can only be used by businesses that operate in the general system of taxation, and these are usually large enterprises. As for the taxation of small businesses, the analysis shows that the tax burden on them has been growing steadily in the last decade.
An effective tax policy is a constant search for a balance between the burdens of the tax burden and the effect of public goods produced at its expense, primarily general and economic infrastructure and institutional conditions of economic activity (security, maintenance of law and order, compliance with the rules of the game). objects of management, etc.).
Efficiency involves not only providing the state budget with stable and uniform revenues, but also encouraging taxpayers to develop business, improve production technology.
In general, increasing the efficiency of the tax system of Ukraine is possible only in the presence of a modern scientific concept of improving tax legislation, built on a systematic approach, taking into account the implementation of key law-making factors and creating optimal interaction of all parts of the tax system.