Ukraine: Technical Assistance Report-Reducing Social Security Contributions and Improving the Corporate and Small Business Tax System
IMF Staff Country Reports, February 8, 2016
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Bibliographic details
- Published: February 8, 2016
- Series: IMF Staff Country Reports
- DOI: https://doi.org/10.5089/9781498315906.002
Summary
- The paper discusses four closely connected tax policy issues in Ukraine: social security contribution (SSC), the simplified tax regime for small taxpayers (ST regime), the corporate profit tax, and excise tax.
- Ukraine's SSC rates are described as very high and are associated with an oversized informal sector that erodes the tax base.
- The simplified tax regime for small taxpayers provides inordinate benefits that weaken the tax system and is prone to abuse.
- Corporate profit tax revenue has declined to its lowest level since 2006 and is now well below the regional average.
- Excise taxes have become an important revenue source, but remain low by international standards.
Key findings and diagnostics
- Social security contributions (SSC)
- SSC rates in Ukraine are characterized as "very high."
- High SSC rates are associated with an oversized informal sector that erodes the tax base.
- Simplified tax regime for small taxpayers (ST regime)
- The ST regime provides inordinate benefits that weaken the tax system.
- The ST regime is prone to abuse.
- Corporate profit tax
- Corporate profit tax revenue has declined to its lowest level since 2006.
- Corporate profit tax revenue is now well below the regional average.
- Excise taxes
- Excise taxes have become an important revenue source for Ukraine.
- Excise taxes remain low by international standards.
Policy implications and focal areas for reform
- Reduce SSC rates to address incentives for informality and broaden the tax base.
- Reform the simplified tax regime for small taxpayers to remove inordinate benefits and reduce opportunities for abuse.
- Strengthen corporate profit tax policy and administration to reverse the decline in revenue and align with regional norms.
- Reassess excise tax levels and structures given their growing importance as a revenue source and their relatively low levels internationally.
Publication and metadata
- Series: Country Report No. 2016/025
- Issue: 025
- Volume: 2016
- Pages: 85
- DOI: https://doi.org/10.5089/9781498315906.002
- Stock No: 1UKREA2016001
- ISBN: 9781498315906
- ISSN: 1934-7685
- Subject: Excises, Income, National accounts, Personal income tax, Revenue administration, Taxes, Value-added tax
- Keywords: CR, Eastern Europe, excise tax, Excises, flat rate, Income, ISCR, low income, Personal income tax, reduction coefficient, retail price, single tax, SSC rate, SSC revenue, ST regime, tax burden, tax rate, Value-added tax
International Monetary Fund. Fiscal Affairs Dept. "Ukraine: Technical Assistance Report-Reducing Social Security Contributions and Improving the Corporate and Small Business Tax System", IMF Staff Country Reports 2016, 025 (2016).
Content in this bundle
- Chapter V: Corporate Profit Tax
- _cr1625u