Tax incentives under martial law: compliance-risk management

Abstract

Introduction. In the conditions of the armed aggression of the Russian Federation against Ukraine, the need arose to amend the current legislation aimed at overcoming the negative phenomena in the economic, social and defense spheres. Problem Statement. During the two months of martial law, six laws were passed that amended the current tax rules and provided benefi ts to certain categories of taxpayers. At the same time, most legislative acts were adopted without proper fi nancial, economic and scientifi c justifi cation for their adoption. Th is has led to fi scal risks, which are discussed in the article. Purpose. Th e aim is to study the probable risks of the introduction of certain legal norms in the conditions of martial law and to develop recommendations for their minimization. Methods. Qualitative research methods were used to describe the existing diffi culties in tax administration, quantitative methods – to analyze the benefi ts of corporate income tax and VAT. Results. It has been found that the analyzed norm-forming practice will lead to budget losses and disproportionate taxation of other taxpayers. Th is is not in line with the concept of compliance risk management, as these preferences can be used by other payers. As a result, the risk of aggressive tax planning by those taxpayers who are not cove red by the benefi ts will increase. Conclusions. Fully unjustifi ed unconditional provision of tax benefi ts to certain categories of taxpayers requires careful analysis in order to achieve the declared purposes. Proposals for amendments to legislation to minimize fi scal risks within the compliance risk management procedure have been formulated.