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Aggressive Tax Planning: Negative Consequences and the Directions of Countermeasures

Journal: Scientific Bulletin of Mukachevo State University. Series “Economics” (Vol.5, No. 1)

Publication Date:

Authors : ;

Page : 153-158

Keywords : aggressive tax planning; multinational entities; tax evasion; taxpayers; low-tax jurisdictions;

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The purpose of the study is to reveal the negative effects of aggressive tax planning on the state economy, to analyze contemporary approaches of countermeasures against this phenomenon at the European level, and to justify the need of the improvement of the counteraction against aggressive tax planning in Ukraine. The methodological tools of the study consisted of dialectical and graphic methods, the method of comparative analysis and synthesis - to generalize foreign experience in fighting against aggressive tax planning, as well as the method of scientific abstraction - to formulate proposals on directions of countermeasures against aggressive tax planning in Ukraine. The article deals with the reasons of activation in European countries of countermeasures against aggressive tax planning as a way of reducing tax liability taking advantage of the technicalities of a tax system or of mismatches between two or more tax systems. The legal and regulatory framework for the fight against aggressive tax planning at the level of the European Union has been considered. The negative consequences of functioning of the mechanism of aggressive tax planning for the economy of the country have been revealed, namely: loss of tax revenues, distortion of the level playing field between companies that manage to avoid paying their fair share of taxes and other companies; lack of fairness and impact on taxpayer morale. It has been substantiated that aggressive tax planning is one of the main problems of modern world economies and that its resolving lies in the area of deepening international cooperation, improving the regulatory legislation on taxation and developing technologies for detecting and preventing this phenomenon. It has been also revealed that taking into account the specific structure of Ukraine's economy, the dominant role of which belongs to large enterprises, the lagging behind in the introduction of new methods of countermeasures against aggressive tax planning can result in significant losses for the budget. In addition, it is important to eliminate the disadvantages of legislation that allow ambiguous interpretation of tax rules. The author notes that Ukraine faces the task of implementing the mandatory conditions defined by the BEPS Plan, including the introduction of automatic exchange of information on tax rulings, as these measures will prevent tax base erosion and withdrawal of taxable incomes outside the country. The further research will deal with the methodological approaches and procedural aspects of the implementation of the OECD recommendations to prevent the manifestations of aggressive tax planning in Ukraine.

Last modified: 2021-08-18 20:39:27