№ 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)

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