The Fiscal Efficiency of VAT Electronic Invoicing System in the Domestic Market of Ukraine

Abstract

The objectives of the introduction, the content and impact of the reform of electronic administration of VAT through the indicators of fiscal efficiency of value added tax in Ukraine are generalized. The assessment of the fiscal efficiency of the tax was carried out using a set of annual indicators of the effective tax rate in relation to GDP and the end domestic consumption of goods and services. It is proved that digital transformations in taxation primarily stimulate the transparency of taxation procedures. The indicators of actual VAT revenues for the period 1997–2022 are summarized. The main goals of the electronic transformation of VAT in Ukraine are to return justice to fiscal practices: elimination of fictitious suppliers, «carousel fraud», «tax pits», «twists», conversion centers, «optimizers» from VAT chains; combating payment evasion through improved administration; reduction of discretion in the application of tax procedures; reduction of corruption rents; elimination of administrative pressure from the tax authorities; simplification of mechanisms for administration and payment of VAT, etc. The lack of success concerning the positive impact of VAT electronic invoicing system on the efficiency of tax collection for operations in the domestic market is corroborated. The factors of fiscal inefficiency of VAT in Ukraine are: significant shadow sector of the economy; functioning of a simplified taxation system to avoid VAT; refusal to fiscalize cash payments for single tax payers in 2019-2022; availability of tax benefits for the rapidly growing agricultural sector (single tax group 4); lack of control over cash payments in many sectors of the economy; a ban on documentary audits of taxpayers due to the russian-Ukrainian war.

Keywords

• electronic tax invoice
• vat electronic invoicing system
• fiscal efficiency
• indirect taxes
• tax collections
• administrative practices