Modeling the possible impact of exit capital tax on Ukrainian economy
Journal Title: Наукові записки Інституту законодавства Верховної Ради України - Year 2019, Vol 1, Issue 2
Abstract
The main directions of enhance the performance and the level of profitability of Ukrainian enterprises is the improvement of corporate income taxation. However, the globalization of the economy in the area of free movement of capital from high to low taxable jurisdictions has led to the erosion of the tax base for corporate income tax on a global scale. The emergence of such international problem highlights the need for study of alternative approaches to the corporate taxation and assessment of their economic impact on the economic environment. The purpose of this article is to study alternative approaches to corporate income tax reform in the projection of international experience and using of econometric and mathematical modeling. The scientific novelty of the article is to analyze the integrated approach to the study of the impact of the cash flow corporate income tax (if it be implemented) on the Ukrainian economy through the construction of a discrete equilibrium model based on the combination of economic and mathematical functions related to the activities of business entities and households. The Funke’s and Strulik’s discrete (dynamic) equilibrium model was taken as the basis. This model represents a simple exogenous growth model with an inelastic supply of labor. As a result of the construction of the model, it was concluded, that the abolition the traditional corporate income tax reduces the possibility of influencing on the change in the structure of investments because all rests of the income are not taxed equally. This is a negative factor for the Ukrainian economy, whose structural adjustment is focused on the production with high added value. At the same time, there is a probability that the emergence of unconventional differences in the taxation of capital and labor income will lead to complications of tax administration. Also, such a difference in taxation may create incentives for changing the organizational-legal form of ownership from private to corporate (share hold) form, which will lead to shift from labor income to capital.
Authors and Affiliations
M. Stadnyk
Keywords
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- EP ID EP548374
- DOI 10.32886/instzak.2019.02.13
- Views 84
- Downloads 0
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