Assessment of the impact of capital cost recovery on the international tax competitiveness of OECD countries and Ukraine

The article presents an assessment of the impact of capital cost recovery policies of the OECD countries and Ukraine on their international tax competitiveness, based on a comparison of the treatments of investment in machinery, buildings, and intangibles that a business can recover through the tax code via depreciation. The rating of the international tax competitiveness of the OECD countries and Ukraine is based on the standardized capital allowances. Although the assessment of international tax competitiveness is expressed by the only indicator, such as capital allowances, it serves to prove that international tax competition is responded not only by reducing tax rates but also by defining a business tax base. According to the results of the study, the dominant position in the ranking of the OECD countries is occupied by countries that are able to recover higher costs of capital investments (over 68%). These countries are characterized by particularly high (by international standards) capital allowances for equipment and intangibles (over 82%). Unfortunately, due to the lack of tax harmonization of the Ukrainian tax system, specifically its treatment of capital allowances, with the EU and OECD countries, Ukraine falls behind in the ranking of international tax competitiveness. Thus, in order to enhance the competitiveness of the domestic corporate income tax system, Ukraine's treatment of capital investments in core assets, especially buildings and intangibles, should be improved and brought in line with both modern Ukrainian socio-economic realities and the capital cost recovery provisions accepted in the OECD.