Open AccessAlgorithm and selection criteria for small enterprise taxation system in Ukraine
Author(s) -
Valentyna Onisiforova,
Vladyslava Sidelnikova
Publication year - 2019
Publication title -
ekonomìka, fìnansi, pravo/ekonomìka. fìnansi. pravo
Language(s) - English
Resource type - Journals
eISSN - 2786-5517
pISSN - 2409-1944
DOI - 10.37634/efp.2019.11(2).6
Subject(s) - profitability index , tax rate , profit (economics) , business , microeconomics , income tax , economics , industrial organization , public economics , finance , monetary economics
The problem of optimization of the tax burden is urgent for any enterprise that operates in a market economy. In current conditions in Ukraine the part of the enterprises which are belonged to the group of small in according to degree of they activity has a legally established and regulated alternative when choosing the method of their activities results taxation. These mean that these enterprises have a choice between a general and simplified system of their activity taxation. However, this choice should be made reasonably, taking into account all aspects of the activity of a particular enterprise. The purpose of the article is determination of the algorithm and criteria for selecting the most effective system of the enterprise activity results taxation, help to choice general or simplified taxation according to minimize the tax burden. In fact, the problem of choosing a tax system takes place only for the entrepreneurs of the third group. For entrepreneurs who belong to the first and second groups, a simplified tax system is by far the most appropriate. The main criterion for deciding about choosing the tax system is the control of level profitability. A simplified tax system that links the tax level to the income level of an enterprise is more profitable for businesses with a high level of profitability. This means that the profitability of the activity must exceed a certain threshold level at choosing this system. Under the current 18 percent income tax rate and the third group single tax rate of 5 percent of profit, the limiting level of profitability, exceeding of which is the criterion for the transition to a simplified tax system, is 28 percent. The profitability level will have a slight adjustment to the cost of accounting services if foreign workers are involved for this. However, such adjustments are insignificant. An important condition for the transition to a general system of taxation at a profitability level below the limiting level is the ability to full, accurate and objective reflection for all existing costs. The presence of large amounts of non-transparent costs is a factor for choice of simplified tax system.