ANALYSIS OF APPROACHES TO THE ASSESSMENT OF THE TAX GAP FOR VALUE ADDED TAX
Abstract
Value added tax is one of the most important sources of state budget replenishment both in Ukraine and in the world. VAT is one of the few indirect taxes for which taxpayers have developed a significant number of schemes and mechanisms to minimize their obligations. The existence of an effective, fair and effective regulatory framework for the functioning of VAT does not guarantee the completeness and timeliness of its payment. Quite often, the existence of a wide range of privileges and special conditions for charging this tax is used by taxpayers for the purpose of unjustified receipt of benefits. These features form the prerequisites for strengthening the control over the efficiency of the administration of accrual procedures and payment of VAT by the tax authorities, rather than on its regulatory support. The article is devoted to the study of the nature and features of the formation of tax breaks on value added tax. The object of the article is to analysis of existing practices for assessing the extent of the VAT gap. On the basis of the analysis of the existing theoretical and practical experience of the de-shadowing of the economy, systematization of approaches to the assessment of tax breaks has been carried out, their characteristic features have been determined. The analysis of the existing practices of assessing tax breaks on VAT showed that there is no unified approach to their assessment, the low level of approbation of the results obtained in Ukraine, the legislative settlement of issues of assessment and management of tax breaks at the level of legislative and executive authorities. The theoretical and methodological basis of the study are the fundamental principles of modern economic theory and state management, the current world experience in assessing tax gaps in the economy. According to the results of the analysis, it was concluded that it is advisable to investigate the problem of constant growth of the share of the shadow sector of the economy, due to the evasion of taxpayers' fulfillment of their tax obligations by assessing the volume of tax gaps. The results of the research may be useful for the authorities when developing measures to prevent tax evasion. Results can be the basis for further research, in the context of determining the most effective instruments to counter tax evasion.
References
1. Alfirman L. (2003). Estimating stochastic frontier tax potential: Can Indonesian local governments increase tax revenues under decentralization. Center for Economic Analysis, University of Colorado at Boulder. Working paper. Available at: https://www.colorado.edu/economics/papers/WPs-03/wp03-19/wp03-19.pdf (accessed 10 November 2019)
2. Allingham M.G., Sandmo A. (1972). Income tax evasion: a theoretical analysis. Journal of Public Economics, vol. 1, pp. 323–338.
3. Battese G.E., Coelli T.J. (1995). A model for technical inefficiency effects in a stochastic frontier production function for panel data. Empirical Economics, vol. 20(2), pp. 325–32.
4. European Commission. Tax Policies in the European Union 2016 Survey. Brussels: European Commission. Available at: https://ec.europa.eu/taxation_customs/sites/taxation/files/tax_policies_survey_2016.pdf. (accessed 10 November 2019)
5. Gemmell N., Hasseldine J. (2012). The tax gap: a methodological review. In Advances in Taxation. Emerald Group Publishing Limited, vol. 1, pp. 203–231.
6. Giles D.E. (1999). Modelling the hidden economy and the tax-gap in New Zealand. Empirical Economics, vol. 24(4), pp. 621–640.
7. Kumbhakar S.C., Lien G., Hardaker J.B. (2014). Technical efficiency in competing panel data models: a study of Norwegian grain farming. Journal of Productivity Analysis, vol. 41(2), pp. 321–37.
8. Murphy R. (2017). Why bother with the tax gap? An introduction to modern taxation theory, London: City Political Economy Research. Available at: https://www.city.ac.uk/__data/assets/pdf_file/0007/348856/ CITYPERC-WPS-201704.pdf (accessed 10 November 2019)
9. Nerudova D., Dobranschi M. (2019). Alternative method to measure the VAT gap in the EU: Stochastic tax frontier model approach. PLoS ONE, 14(1). Available at: https://doi.org/10.1371/journal.pone.0211317 (accessed 10 November 2019)
10. Study and Reports on the VAT Gap in the EU-28 Member States: 2019 Final Report Austria. - Institute for Advanced Studies, 79 р.
11. Serebryanskyi D. (2016). Fiskalna efektyvnist PDV v Ukraini [Fiscal Efficiency of VAT in Ukraine]. Available at: http://advisortax.org/wp-content/uploads/2016/11/VAT_Present.pdf. (accessed 10 November 2019)
