In the current circumstances to compensate for falling incomes of the state budget without increasing the fiscal pressure on the economy, and so that is high enough, it is possible only through active struggle against minimizing taxes. The Ukrainian government has developed a set of measures to combat and eliminate the most common schemes “reduce” taxes. Filed in Parliament a bill together most of the initiatives and proposals to the Ministry of Finance and State Tax Administration have acquired in recent years. Despite the fact that the document contains a number of controversial rules, he still is very relevant for the country …

budget hole provoking …

reason for such close attention to this problem is contained in the need to increase tax revenue. Last year, the Cabinet has exhausted the possibility of debt financing and emission costs, and taxes collected in advance and the lack of VAT in the present budget period further would reduce the financial resources of the Government this year. The Government will either have to go on raising taxes (and new), or intensify the fight to the minimization of taxation and the shadow sector of the economy that really has unlimited potential fiscal.

Internal Revenue Service and Treasury in recent years have tried to cut off some local schemes to reduce tax through legal acts, but often encountered resistance to business, which saw in this abuse of authority by the executive. It is worth remembering the fate decrees of Cabinet of Ministers № 757-p “Some questions of the administration of taxes, duties (obligatory payments) of 01.07.2009 and № 838-p” On the settlement of certain matters of administration of value added tax “on 17.07.2009 g., effect of certain provisions which President Yushchenko has suspended after violent protests entrepreneurs.

course, the obvious was the fact that CMU is really beyond the scope of its authority, since those problematic issues, which he tried to settle their acts, in fact, demanded changes in tax law. Realizing the fact that dispense with the decision of the parliament impossible Kabimin still lodged in the Rada the bill “On amendments to some legislative acts on taxation” (registration number 5513). Formally, the initiator was made by people”s deputy Vlasenko, but the legal act of preparing the Ministry of Finance and State Tax Administration.

main innovations

Among the key innovations that have substantially altered the rules of the existing legal framework, is the following:

Implementation

Institute ordinary prices. Formally, it has long been discharged in the Law of Ukraine “On taxation of income of enterprises”, but still difficult to implement in practice. Because of the unresolved the application, he used the supervisory authorities. The bill number 5513 offered a clear an exhaustive list of circumstances under which regulatory authorities can use this institution to determine the tax base and tax extra charges. According to him, the normal price will be applied in the case of a taxpayer:

a) any operations of foreign economic agreements (contracts);

b) barter transactions;

c) transactions with related parties;

g) transactions with taxpayers who use different rules or tax rates than a taxpayer (usually uproschentsy).

By the way1000, it is through these tools implemented most of the schemes to minimize taxation through a reduction of the tax base the tax on business profits and inflation, the tax credit. Now the State Tax Administration may establish their own business costs, according to some articles (including the costs of servicing the debt resources, which is also a novelty), and accordingly adjust the tax base of the profit tax of enterprises.

is particularly important that the institution of regular prices apply to transactions with economic entities that operate under a simplified system of taxation. Quite often they are used to issue tax invoices (VAT), which then are presented by other participants of this chain for the formation of the tax credit. In order to inflate the amount of VAT, these actors (SPD Simplified) realize their “partners” products at prices above market.

bill virtually eliminates this scheme, as it allows regulatory authorities to determine the tax base, as well as carry out spot checks, if the taxpayer has a relationship with such entities.

next item - gain control with minimization of profit before tax. In addition to the above, the bill has a number of important innovations, which should strengthen the fight against a total loss-Ukrainian enterprises. If now the basis for unplanned audit of a business entity, which declares a negative value of the object of taxation, is the filing of appropriate returns for four tax periods in a row, the bill number 5513 provides that checks need only one declaration with a negative tax base. On the one hand, it is - increasing fiscal pressure on the other - the current system creates a wide field in order to evade verification, it is sufficient to declare the loss of three reporting periods, and the fourth to show a minimum profit. In this case, the State Tax Administration today there is no reason for spot checks of such enterprise.

But far less meaningful and understandable to an innovation, according to which, since the tax period (first quarter 2010), outstanding loss in 2009 not be taken into account in the gross expenditure of the tax payer in the first quarter of 2010 In other words, pre-tax profit this year, companies can adjust to the loss in 2009 only after the entire year, as in the first quarter are required to pay tax on income excluding loss in 2009 This rule is opportunistic in nature, because its existence is dictated by the need to fill the budget in the first half which will be extremely tight in terms of balancing revenue and expenditure side.

Another highly controversial rule is the fragmentation of the tax period for the payment of income tax. The bill includes the 5513 novel of the bill Lyashko, whereby the company, except for non-residents and agricultural producers, must pay a monthly budget (up to 20 of every month) the tax on profits, defined as 1 /12 the amount of accrued income taxes for the previous calendar year, indexed to the inflation index of the previous calendar year. Now Ukrainian enterprises pay income tax on a quarterly basis and based on financial performance for the period.

In this situation, the Government rightly raises the question of introducing a so-called “minimum tax” which performs not only fiscal functions, but also aims to solve the problem of inefficient enterprises, but this method seems not very efficient.

Another section - opposition to attempts inflation tax credit. The bill number 5513, considerable attention paid to one of the key problems in Ukraine - to minimize the payment of VAT. This document is proposed to significantly narrow the size of potential tax credit. First, it provides for the creation of the Unified Register of tax bills, with no discharge from the invoices which are not considered when calculating the ta1000x credit. Registration in the registry is being introduced for VAT payers who have it in the same amount of the tax bill is as follows: more than 1 million UAH - on 1 January 2010, over 500 thousand UAH. - From 1 April 2010, over 100 thousand UAH - June 1, 2010.

Secondly, the draft Law provides that the tax invoice issued by the tax payer, which operates on the supply of goods (services), at the request of the recipient only if the actual shipment (for) such goods (services). Most experts are well aware that the inflation tax credit is made just for transactions without physical delivery of goods.

Thirdly, according to the draft law is limited to use in calculating the tax credit overdue invoices. It would not have protested entrepreneurs, but the situation when the formation of the tax credit bill is given two or three a year ago, is not normal.

also listed the major innovations, the bill contains many technical nuances that can broaden the tax base of the profit tax, as well as reduce the possibility of unjustified inflation tax credit. There is no doubt that once the draft law under consideration by parliamentarians in the country will begin a massive surge of discontent, complaints about the increasing fiscal pressure on the economy, harassment of entrepreneurs, etc. In part, these charges will have valid arguments, in fact complicating the work of the shadow economy, Government does not propose a mechanism to simplify the work legally. In this context, this important bill will be considered only as a unilateral pressure from the government, rather than attempt to create a normal business climate in the country …

Alex Moldovan, Center for Crisis Studies

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