Implementation of the concept of tax expenditures in Ukraine: problems and ways to solve them

Abstract

Introduction. The preparation of reports on tax expenditures and their use in the process of budget management has become widespread in many countries of the world. Since 2004, the Global Tax Expenditure Database has included information on tax expenditures in Ukraine. However, the degree of implementation of the concept of tax expenditures in the budget process varies greatly in different countries. Problem Statement. Imperfect procedures for reporting on tax expenditures and their formal connection with the budget process, or even the absence of such a connection at all are significant reasons for insufficient transparency of tax expenditures budgets and the effectiveness of their use as public policy tools. Purpose. The goal is to assess the state, determine the problems of integrating the report on budget losses from the use of tax reliefs (tax expenditures) into the budget process in Ukraine and ways to solve them. Methods. General scientific methods of cognition were used: critical analysis of the controversial provisions of the concept of tax expenditures; a combination of abstract-logical and concrete, comparative analysis. Results. The steps that should be taken to ensure the effective implementation of the tax expenditure budget, as well as the state of their implementation in several countries and in Ukraine, are analyzed. The problems on the way to the implementation of the concept of tax expenditures in Ukraine are revealed: uncertainty at the legislative level of the concept of “tax expenditures” and the body responsible for the formation of a consolidated report on tax expenditures; non-disclosure of their assessment methodology; improper coordination of the work of the State Tax Service of Ukraine and the State Customs Service of Ukraine on collecting and transmitting information on tax expenditures; formal inclusion of information on tax expenditures in the budget process; absence of systematic evaluation of the effectiveness and efficiency of tax expenditures. Conclusions. It has been established that only the first steps have been taken in Ukraine towards the development and implementation of the tax expenditure budget and its integration into the country's budget process, and proposals have been developed for measures that must be implemented for further progress on this path, in particular changes to tax and budget legislation, as well as the administrative documents of executive authorities involved in the preparation of reports on tax expenditures.