SIMPLIFIED TAXATION REGIMES FOR SMALL AND MEDIUM-SIZED ENTERPRISES: EXPERIENCE OF EU COUNTRIES AND TRANSFORMATION IN UKRAINE

Abstract

The reform of the simplified taxation system is one of the important goals of the state's financial policy, as set out in the National Revenue Strategy until 2030 and Ukraine's integration into the European economic area. The current simplified taxation system in Ukraine is not in line with European practice and is used by large businesses to minimise tax liabilities. The purpose of the article is to substantiate the options for the simplified taxation system reform in Ukraine in accordance with the National Revenue Strategy until 2030, taking into account the European experience. The main results of the study. The systematisation and substantiation of the essence of special VAT schemes for SMEs in the EU countries, as provided for by Council Directive 2006/112/EC, were further developed. This made it possible to study the thresholds for VAT registration and application of certain schemes determined by the European Commission and the OECD, and to substantiate practical recommendations and warnings regarding changes in the threshold for VAT registration in Ukraine. It is proven that simplified taxation of entrepreneurs' income is a rare occurrence in European practice, but in Ukraine, it should be preserved to maintain a favourable business environment and stimulate entrepreneurial activity. The approaches to the simplified taxation system reform have been improved. They include reducing the number of taxpayer groups by consolidating them; cancelling the possibility to be on the simplified taxation system for legal entities; optimising the amount of net income that gives the right to use this system; and introducing a new methodology for determining the single tax rate for taxpayers of the first group based on the average or minimum wage. The latter innovation will help minimise the effect of artificial business splitting to reduce tax liabilities, stimulate entrepreneurial activity, and generate additional budget revenues. In developing the final parameters of the simplified taxation system reform, it is important to take into account the restrictive effect of the military tax and to provide financial support schemes for SMEs.