COMPETITIVENESS OF THE TAX SYSTEM IN THE CONTEXT OF EXPANDING THE FISCAL SPACE OF UKRAINE

Abstract

For many countries, the competitiveness of the tax system is a complex issue, as it not only reduces the tax burden on corporate income, whileensuring the intensification of economic development, but also leads to risks of lower tax revenues and loss of public financesustainability. Tax competition requires finding a compromise between ensuring investments and expanding fiscal space to deal withurgent socio-economic challenges in the face of new global challenges.
The authors carried out a comparative analysis of the efficiency of tax reforms in terms of their impact onreducing the tax burden on business and increasing the competitiveness of tax systemsin the EU and Ukraine. Despite the success of such reforms in the EU, it was found that Ukrainian reforms have not been quite as efficient in achieving the appropriate level of investments and creating conditions for reducing the shadow economy. It is determined that tax reforms in Ukraine were carried out without considering specific effects of changes in corporate income taxation conditions, in particular, the impact of lower tax rates on tax revenues in the medium and long term, intensification of innovation and investment activities, investment dynamics abroad, etc. It is proved that the priority of increasing the international tax competitiveness of Ukraine should not consist intax ratesdecreasing and eliminationof tax restrictions on the formation of the corporate income tax base, but in the improvement of depreciation policy in terms of accelerating reimbursement of fixed assets and intangible assets, stimulating capital investment in the renewal of production on an innovative basis. It is substantiated that the development of the tax system of Ukraine (as well asother countries with small, open economy and with high level of corruption and shadow economy) should take place within the framework of a holistic concept of sustainable development, taking into account the possible consequences of budget decisions for both current and long-term budgets that will apply to future generations.