№ 5/2018

Fìnansi Ukr. 2018 (5): 80–93

TAX POLICY

DUB Andrii ¹

¹SI “Institute of Regional Research named after M. I. Dolishniy of the NAS of Ukraine”
OrcID ID : https://orcid.org/0000-0001-6377-1556

Transformation of personal income tax administration: world experience and opportunities for Ukraine

Income tax (in particular, taxation of employment income) in many countries of the world is a significant source of income for almost all local budgets, since it comes at the place of permanent residence of an individual. In Ukraine, it comes to the budgets of the communities by the location of the legal entity-employer, while social services are financed at the place of residence of the person. The purpose of the research is to evaluate the expediency of changing the order of the inclusion of personal income tax in local budgets at the place of permanent residence of an individual, to offer and substantiate possible ways of this transformation. The authors analyze the international experience of taxation of employment income individuals and the share of personal income tax in local budget revenues. Also, the alternatives for transformation in Ukraine of the procedure for the transfer of personal income tax to local budgets at the place of residence of a person are critically evaluated. As a result, the analysis of international practices shows that the current system of charging individuals' income tax at the place of registration of a legal entity in Ukraine deprives a significant number of local communities of potential financial resources for development. The most acceptable alternative for transforming the Ukrainian system of administering personal income tax from employment is the option in which: individuals will be obliged to file data about their tax address with employers and to submit a tax return to avoid double taxation; employers are obliged to hold and transfer the tax to local budgets, and to report to the fiscal authorities; state agencies – to carry out information work among the population in order to increase tax culture. In conclusion, the optimal way of changing the system of administering personal income tax in the part of its transfer to local budgets in Ukraine is the distribution of additional burden of administering between all actors: an individual, an employer and state agencies.

Keywords:personal income tax, local budget, local community, decentralization, residence, tax address

JEL: H24, H71

Dub A. . Transformation of personal income tax administration: world experience and opportunities for Ukraine / A. Dub // Фінанси України. - 2018. - № 5. - C. 80-93.

Article original in Ukrainian (pp. 80 - 93)

Download

Downloads :256

1. Nepochatenko, O. O., Borovy`k, P. M. & Parіj, D. Yu. (2016). The updated mechanism for collecting the tax on personal incomes: problems and prospects. Economy. Management. Innovations, 1, 54–70 [in Ukrainian].
2. Py`s`menny`j, V. V. (2016). Planning of income tax on personal income to local budgets. Bulletin of TNEU, 2, 80–89 [in Ukrainian].
3. Shvec`, O. Yu., Bakhmetova, Ya. Yu. (2017). Taxation of Individuals’ Income: Problems and Prospects in Ukraine and the EU. Global and national problems of the economy, 17, 771–775 [in Ukrainian].
4. Shvabіj, K. І. (2013). Regulatory efficiency of personal income tax in Ukraine. Finance of Ukraine, 4, 27–44 [in Ukrainian].
5. Shevchuk, І. V. (2011). Foreign experience of taxation of individuals’ incomes and possibilities of its adaptation in Ukraine. The Herald of ZhNAEU, No. 1, Vol. 2, 333–342 [in Ukrainian].
6. Deloitte. (n. d.). Tax guides and highlights. Retrieved from dits.deloitte.com/#TaxGuides.
7. Verkhovna Rada of Ukraine. (2010). Budget Code of Ukraine (Act No. 2456-VI, July 8). Retrieved from zakon5.rada.gov.ua/laws/show/2456-17/paran2033#n2033 [in Ukrainian].
8. Verkhovna Rada of Ukraine. (n. d.). Explanatory note to the draft Law “On Amendments to Article 168 of the Tax Code of Ukraine regarding the Inclusion of Individual Income Tax”. Retrieved from w1.c1.rada.gov.ua/pls/zweb2/webproc4_1?pf3511=62439 [in Ukrainian].
9. Moreno, T. (2017, April 23). State Income Tax Rates. Retrieved from www.thebalance.com/state-income-tax-rates-3193320.
10. Moreno, T. (2017, February 2). U. S. Cities that Levy Income Taxes. Retrieved from www.thebalance.com/cities-that-levy-income-taxes-3193246.
11. Flanagan, R. (2016, October 18). State Income Tax: Living in One State, Working in Another. Retrieved from www.rapidtax.com/blog/state-income-tax-living-in-one-state-working-in-another/.
12. McMullen, A. (n. d.). Do You Pay State Income Taxes Based on Where You Lived or Where Your Income Was Earned? Retrieved from finance.zacks.com/pay-state-income-taxes-based-lived-income-earned-4637.html.
13. Deloitte. (2016). Sweden Taxation and Investment 2016. Retrieved from www2.deloitte.com/content/dam/Deloitte/global/Documents/Tax/dttl-tax-sweden guide-2016.pdf.
14. Mitchel, А., Dunn, R. E. (2008, June 1). U. S. “State” Tax Residency (Domicile). Retrieved from intltax.typepad.com/intltax_blog/2008/06/us-state-tax-residency-domicile.html.
15. KPMG. (n. d.). United States – Income Tax. Retrieved from home.kpmg.com/xx/en/home/insights/2011/12/us-income-tax.html#03.
16. Ly`tovchenko, N., Holovіna, D. (2014, February 1). Experience of the Great Britain: peculiarities of PIT payment and declaration of incomes. Bulletin. Officially about taxes. Retrieved from www.visnuk.com.ua/ua/pubs/id/6566? issue=154 [in Ukrainian].
17. Canada Revenue Agency. (2017). General Income Tax and Benefit Guide 2017. Retrieved from www.canada.ca/content/dam/cra-arc/migration/cra-arc/E/pub/tg/ 5000-g/5000g-17e.pdf.
18. Verkhovna Rada of Ukraine. (2003). About freedom of movement and free choice of place of residence in Ukraine (Act No. 1382-IV, December 11). Retrieved from zakon2.rada.gov.ua/laws/show/1382-15 [in Ukrainian].
19. State Migration Service of Ukraine. (n. d.). Registration of place of residence. Retrieved from dmsu.gov.ua/vazhlivo/reestracziya-misczya-prozhivannya.html [in Ukrainian].
20. The Swedish Tax Agency. (n. d.). Reporting a change of address. Retrieved from www.skatteverket.se/servicelankar/otherlanguages/inenglish/individualsandem ployees/reportingachangeofaddress.4.5c1163881590be297b51920b.html.