№ 1/2021

№ 1/2021

Nauk. pr. NDFI 2021 (1): 5–21https://doi.org/10.33763/npndfi2021.01.005

TAX POLICY

IEFYMENKO Tetiana ¹, IVANOV Yurij ², KARPOVA Vlada ³

¹SESE “Academy of Financial Management”
OrcID ID : https://orcid.org/0000-0002-9163-3959
²Research and Development Centre for Industrial Problems of Development of NAS of Ukraine
OrcID ID : https://orcid.org/0000-0002-5309-400X
³SESE “The Academy of Financial Management”
OrcID ID : https://orcid.org/0000-0003-3712-0391

Differentiated VAT rates in Ukraine: problems and directions of solution

In the context of the economic crisis, it is important to ensure a steady flow of taxes to the budget and at the same time support domestic producers. There is a negative trend towards a decrease in VAT revenues for goods and services produced in Ukraine. This leads to a fall in GDP and a deterioration of the economy in Ukraine. Therefore, it is necessary to identify existing problems of administrating VAT in Ukraine and suggest ways of their solving. The purpose of the article is to study the problems of administrating VAT in Ukraine, which are associated with the application of differentiated VAT rates and to develop recommendations for their solution. The article uses qualitative research methods to describe the existing problems in VAT administration. Quantitative methods are used to analyze VAT revenues. The study identified four problems in VAT administration. The first problem is the lack of harmonization of norms on the application of reduced VAT rates in Ukraine with the legislation of the European Union (EU). It is proposed to analyze the potential consequences that may lead to an expansion of the range of transactions for which reduced VAT rates are applied in Ukraine in line with Directive № 112. The second problem is the lack of tools in the Ukrainian legislation that ensure the reduction of prices for the relevant product (service) by the supplier when reduced tax rates are introduced. It is proposed to analyze the price regulation tools used in the practice of EU countries and determine the feasibility of their use in Ukraine, taking into account the current regulatory framework for price regulation. The third problem is the growth of the tax burden on processing enterprises with the introduction of reduced VAT rates in Ukraine. It is proposed to analyze the feasibility of extending reduced VAT rates not only to primary products, but also to the relevant processing companies that use these products, based on the practice of EU countries. The fourth problem is ambiguities in rules for applying a reduced VAT rate to the hotel business. It is proposed to clearly define which services are subject to the reduced rate, whether the reduced rate is applied to catering services or to other hotel services, as provided for in some EU countries. In addition, it is necessary to clearly define the range of persons who can apply a reduced VAT rate to hotel services and also include natural persons-entrepreneurs, travel agencies and tour operators who are VAT payers. The proposals set out in the article should be discussed with scientists, specialists, representatives of the business community and the public. Based on the results of the disputes, it is advisable to develop specific recommendations for making appropriate changes to the Tax Code of Ukraine. This will be the direction of further research.

Keywords:value added tax, differentiated VAT rates, standard VAT rate, reduced VAT rates, budget reimbursement, harmonization of EU legislation

JEL: E62, H21, H25, H32

Iefymenko T. . Differentiated VAT rates in Ukraine: problems and directions of solution / T. . Iefymenko, Y. . Ivanov, V. Karpova // Наукові праці НДФІ. - 2021. - № 1. - C. 5-21.

Article original in Ukrainian (pp. 5 - 21)

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