Entities cash-flow tax vs. tax on income: opportunities and threats
Journal Title: Економіка. Фінанси. Право - Year 2019, Vol 6, Issue
Abstract
Introduction. Nowadays in Ukraine operates the system of direct taxation of enterprises. Therefore it caused discussions on replacing the traditional tax on income with the cash-flow tax by the example of Georgia, Estonia and Latvia. The last one has begun working with above mentioned tax system since January 1, 2018. The purpose of cash-flow tax establishment is to invest in the development of their business. Namely all the money the enterprise pays to the state budget today can be invested in the modernization of production. As of December 31, 2019, the share of income tax on incomes of the state budget of Ukraine is 8, 20 %. This is 33716,5 billion UAH per year. This revenue is a serious loss of the state budget during the cancellation of the income tax. According to experts, the cash-flow establishment will lead to losses in budget revenues of 1, 2% to 1, 5%, which is 37 to 47 billion hryvnia. The above-mentioned facts led to the need for a feasibility study of cash-flow tax establishment and tax income cancellation. The purpose of the work is to study the feasibility of cash-flow establishment and tax on income cancellation as well as the advantages and disadvantages of this transformation. Results. On a basis of conducted investigation it was found that cash-flow income doesn’t influence on budget. Because on 31.12.2019 the share in total incomes from all taxes in a state budget consists 8, 20%. As well the experience of Estonia and other countries that cash-flow income made a good impact into the growth of gross domestic product (GDP). It should be noted that during analysis were considered disadvantages and advantages after cash-flow tax establishment for state authorities and tax income payers. During this analyses were considered the necessity of developing compensators that are aimed to prevent the loss in budget during transitional period on cash-inflow taxation. Conclusion. Consequently, the change in the taxation system has an insignificant impact on the budget, since its value is only 8, 20 % (2019) of the total budget. It will also have a positive impact on GDP growth, taking into account the above mentioned experience of other countries. As well this legislative draft provides for the prevention of outflow of capital abroad, which will provide conditions for the recovery of the economy mainly and creation the favorable investment climate in the state.
Authors and Affiliations
Yevheniia Ihorivna Lysova
Keywords
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