E-residency and Direct Taxation: Aspects of Financial Security

Abstract

The publication is aimed at comparative analyzing the forms of direct taxation, formation of innovative e-residency, as well evaluating their impact on the financial security of Ukraine in the conditions of digitalization of the fiscal space. A comparative analysis, on the basis of theoretical and regulatory generalizations on these issues, of the main forms of direct taxation - the classic profit tax and the exit capital tax (distributed profit tax), is presented. Comparisons are made in terms of the base and rates of tax, taxation of international transactions, operations with related persons, investment activity, etc. Two main models for calculating profit tax are described: European (continental) and Anglo-American (Anglo-Saxon), as well as countries of their distribution. The risks of the current corporate profit tax (corporate tax) as a classic form of direct tax are provided. The advantages and disadvantages of the exit capital tax as a separate form of direct taxation are evaluated. The introduction of a tax on exit capital and e-residency in Estonia is considered. The carried out review of the implementation of such a tax confirms the feasibility of applying a fiscal mechanism in order to stimulate investment, digital business, capital inflow into the country. The authors have generalized the existing statistics of the «E-residency» project in terms of the countries of origin of applicants, the dynamics of its development, the gender and age structure of applicants, their motivational factors. Proposals for the stable functioning of the institution of direct taxation and the successful introduction of a tax on distributed profits in Ukraine have been formed.

Keywords

• corporate profit tax
• corporate income tax
• exit capital tax (distributed profit tax)
• financial security
• fiscal space
• tax competition
• e-residency
• fiscal policy