FISCAL INSTRUMENTS TO SUPPORT THE DEVELOPMENT OF THE DEFENSE-INDUSTRIAL COMPLEX OF UKRAINE
DOI:
https://doi.org/10.15407/economyukr.2025.10.003Keywords:
defense-industrial complex; tax incentives; defense products; fiscal support for research, development and innovation; innovation corporate income tax incentive; accelerated depreciationAbstract
In wartime, growing defense needs require an increase in budget expenditures, in particular for the purchase of weapons, as well as the creation of conditions for the innovation-driven modernization and development of the defense industry. The current urgent tasks for the development of the defense-industrial complex (DIC) of Ukraine are to expand state aid for defense-related R&D and innovation in the defense-industrial complex. The problems of introducing fiscal support instruments, in particular the introduction of tax incentives for Ukrainian developers and manufacturers of DIC products as a systemic and effective form of state aid to the strategic sector of the national economy, remain understudied.
The existing tax preferences for domestic DIC enterprises are analyzed, and the strategic directions of DIC development are investigated. The paper substantiates the necessity of referring the targeted, specific, time-limited and controlled tax incentives across the entire innovation chain of creation and production of DIC products (from research and development in the defense sector to the use and commercialization of the results obtained) to the strategic components of state support for the development of defense-industrial complex on an innovative model in Ukraine.
The instruments referring to the fiscal policy that is aimed at solving the strategic tasks of the development of Ukraine’s defense-industrial complex are proposed: preferential taxation for DIC entities, including premium accelerated depreciation of new fixed assets of the fourth asset-group "machinery and equipment"; preferential income tax rate (15%); innovation and training benefits related to the corporate income tax incentives that take into account R&D expenses, innovation and personnel training of enterprises; VAT exemption for operations on import into the customs territory of Ukraine and supply in the customs territory of Ukraine of new equipment and components for it, etc. It is proven that granting the proposed tax incentives is determined by the state's mission to support the high-tech development of the defense industry to ensure the defense capability and future of Ukraine, and also complies with the EU framework conditions regarding the need and justification of state aid.
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