Mobilization of internal state revenues in emergency situations: countering tax base erosion and profit shifting

Abstract

Introduction. Against the background of the post-covid recovery, destroyed by the strengthening phenomena of deglobalization, fragmentation, uncertainty, conflictogenicity, considerable efforts of the member states of the European Union (EU) are aimed at provision of increased financial resources for state needs through restriction of unfair tax practices. Problem Statement. Domestic Revenue Mobilization (DRM) directs the efforts of countries to increase their own incomes and resources of domestic economy by collecting taxes, duties and other revenues. The task must be completed without additional pressure on the business environment and does not aim to increase the tax burden on small and medium-sized enterprises that have been significantly negatively impacted by the COVID-19 epidemic, the main tools of impact should be focused on combating tax evasion by multinational companies and their beneficiaries and preventing tax base erosion in Ukraine in the post-pandemic and post-war recovery period. The purpose of the article is to substantiate the fact that for Ukraine, as a candidate for members of the EU, it is important not only to implement the experience of the EU member states in limiting the ability of multinational companies (MNCs) to apply hybrid instruments for tax base erosion using international structures, but also further systemic harmonization of domestic fiscal regulation in accordance with the best practices and modern rules for the prevention of profit shifting and base erosion (BEPS), which are constantly changing within the framework of supranational norms. Methods. The methods of system-structural analysis, retrospective analysis, analytical, systematization, comparative, dialectical and formal logic were used. Results. The crisis period of post-Covid recovery has become more complicated by the armed invasion of the Russian Federation on the territory of our country, which requires a search of internal revenue mobilization mechanisms to solve current state obligations, as well as for the formation of economic and epidemiological security of the state in the period of post-war recovery for the sake of preservation of socio-economic development and formation of reliable nation’s health care system. Conclusions. The introduction of reporting on controlled transactions, CIC, as well as tax payment by jurisdiction (Country by Country reports) is a progressive step in the direction of overcoming the asymmetry of tax information at the global level. For the effective implementation of all mentioned tools after the accession of the country to the Multilateral Agreement on Competent Authorities (MCAA CRS), it is necessary to focus efforts on the regulatory framework for the implementation of European directives, such as ATAD I and II, the implementation of the provisions of DAC7 for the control of digital activities and inclusion in the exchange information on income from intellectual property in the digital economy, as well as the formation of institutional conditions for the implementation of Pillar 1 and 2 at the national level.