Stylized facts about VAT

Value-added tax (VAT) in Ukraine is the main source of budget revenues. However, due to its weight, complex administration, and, consequently, related heavy corruption VAT is under permanent strong criticism. Disregard the tax is “problematic” in Ukraine, there is no alternative to VAT, especially in the context of our euro-integration aspirations. In fact, collecting VAT is a requirement for all member states.

There is nothing wrong in improving VAT in Ukraine. In this regard, European experience is very important for us. Virtually, in EU VAT administration is more like sales tax, which is so admired by Ukrainian businesses, rather than conventional VAT we used to know. As a consequence, this approach significantly reduces VAT reimbursement problem (since none is paying VAT in advance), enterprises need much less turnover funds and the very VAT administration becomes much easier.

For more details about VAT please see the report «Stylized facts about VAT» (ukr).

Dmytro Boyarchuk