Open AccessComplex issues of the administrative and legal regulation of counteracting the shadowing of the economy in Ukraine
Author(s) -
Yuriy Harust,
N.I. Potapenko
Publication year - 2020
Publication title -
pravovì gorizonti
Language(s) - English
Resource type - Journals
ISSN - 2519-2353
DOI - 10.21272/legalhorizons.2020.i21.p58
Subject(s) - legislation , shadow (psychology) , economic policy , prosperity , legislature , business , national security , foreign direct investment , economy , economics , international trade , market economy , economic system , political science , law , economic growth , psychology , psychotherapist
The Law of Ukraine “On the Fundamentals of National Security of Ukraine” currently defines “shadowing” of the national economy as one of the major, real and potential threats to Ukraine's national security, stability in society, and the economic sphere. Therefore, a process of reforming the administrative and legal support is now being implemented and run simultaneously with deploying of legislative framework (which aim is to improve the investment and business climate in Ukraine). The whole scope of actions and tools is applied within fight against the "shadow" economy. International experience shows that all developing countries join each other in fight against "dirty" cash flows, which is not the only contribute to the deterioration of economic performance, but also fund international terrorism. This article analyzes the most significant sources of "shadow" cash flows. According to the research, its major part consists of offshore and smuggling operations, which amount is over 70% of the total shadow economy. Taking into account this dependency and analysis of economic indicators, it is established that the current legislation contains shortcomings that contribute towards existence and prosperity of a "shadow" sector of the economy. In particular: – imperfection of the current tax legislation: Article 39 of the Tax Code of Ukraine minimizes the results of the state's struggle to withdraw capital from official circulation in offshore zones; – low efficiency of legislation on the regulation of foreign exchange transactions, as well as providing legislation responsibility of management and founders of business entities for non-return of foreign exchange earnings and deliberate bringing of enterprises into bankruptcy due to the increase in amounts of non-refundable foreign exchange earnings; – lack of accessible monetary policy of the National Bank of Ukraine, including the Government of Ukraine at all, which is understandable to the general population due to the increase in the volume of foreign currency purchased by the population, which is stored outside financial institutions. The article highlights the main legal loopholes of the state system in deregulation of the "shadow" economy and identifies the ways of overcoming them.