ORDER OF THE CABINET OF MINISTERS OF UKRAINE

of December 23, 2009 No. 1612-r

About approval of Strategy of reforming of the taxation system

1. Approve the Strategy of reforming of the taxation system which is applied.

2. Declare invalid the order of the Cabinet of Ministers of Ukraine of February 19, 2007 N 56 "About approval of the Concept of reforming of the taxation system" (The Official Bulletin of Ukraine, 2007, N 13, the Art. 481).

Approved by the order of the Cabinet of Ministers of Ukraine of December 23, 2009 No. 1612-r

Strategy of reforming of the taxation system

General part

This Strategy is developed taking into account the tasks provided by the Program of activities of the Cabinet of Ministers of Ukraine "Overcoming influence of world financial - economic crisis and forward development".

The purpose of this Strategy is carrying out during the period till 2018 of the tax reform directed to creation of the modern competitive, socially oriented market economy integrated into the EU, ensuring stable economic growth on innovative and investment basis, realization of the balanced budget and social policy for the medium term.

Achievement of the specified purpose is possible only in case of sales term of the weighed state tax policy which provides adoption of the Tax code of Ukraine for ensuring balance of interests of the state and taxpayers.

International aspects of carrying out tax reform

Development of the national taxation systems of the European countries which Ukraine treats happens under decisive influence of such external factors as the international tax competition and the European tax harmonization.

The aggravation of the economic competition connected with expansion of the EU at the end of XX - the beginning of the 21st centuries delivered the majority of the European countries before need of reforming of the taxation systems which happens first of all in the direction of decrease in the tax burden of work and the capital. For the purpose of creating favorable conditions for attraction of direct foreign investments and acceleration of economic growth step-by-step decrease in rates of the income tax of corporations (companies), in particular in Poland with 34 in 1999 to 19 percent in 2004, Slovakia according to 40 to 19 percent, the Czech Republic - from 35 to 28, of Latvia - from 25 to 15, to Lithuania - from 29 to 15 percent is carried out.

In a number of the European countries the single rate of tax on the income of physical persons is implemented: in Lithuania, Latvia and Estonia respectively 33, 25 and 26 percent, in Slovakia - 19 percent. In 2005-2006 Estonia lowered tax rate to 23 percent, Lithuania - to 27 percent. In other countries - the new members of the EU the tax on the income of physical persons has progressive nature, however during its reforming degree of tax progression decreased owing to decrease in size of rates and reduction of their quantity, in particular in Hungary, Poland and the Czech Republic.

Tax reforms which are undertaken in the developed European countries are directed to liberalization of system of the taxation for the purpose of prevention of capital outflow and qualified specialists. By their results the maximum rate of the income tax of corporations from 2000 for 2006 decreased on average in developed countries - the members of the EU with 35,3 to percent 29,5.

In the majority of EU countries during 1996-2006 rates of the value added tax unlike taxes on the income were stable. In the certain countries their review as for the purpose of increase (Cyprus, Slovenia, Germany, Greece, Italy, the Netherlands, Portugal), and for the purpose of decrease (The Czech Republic, Slovakia, Hungary and France) was performed.

The refusal of many post-socialist countries of realization of policy of reduction of tax rates is caused by not controlled growth of deficit of budgets and the low ascending level of rates of the main taxes and tax burden of economy in general that turned out to be consequence of carrying out liberal tax reforms in recent years and makes not only impossible their further decrease, and forces to take steps in the opposite direction. Such steps since 2006 are performed, in particular, by Lithuania, having implemented additional to the income tax of the companies (since 2002 it is collected at the rate of 15 percent) the so-called social tax (its base the taxable profit is) with rates 4 percent in 2006 and 3 percent in 2007. Besides, since January 1, 2009. The government of Lithuania made the decision on increase in rate of the income tax of the companies and the value added tax to 20 percent.

The aggravation of the economic competition among EU Member States led to deepening of process of unification of the national taxation systems on structure, structure, the mechanism of collection of the main taxes. One of factors of such unification is harmonization of the tax legislation of EU Member States which reached the highest level of development concerning the value added tax and specific excises concerning which the single rules of collection specified in the corresponding Directives of the EU Council are developed.

According to Article 51 of the Partnership and Cooperation Agreement between Ukraine and the European commonwealth and their state members our state has obligations to bring closer the legislation of rather indirect taxation and the taxation of profit of the companies to regulations and standards of the tax law of the EU. During operation of the Agreement in the field of indirect taxation the main requirements of basic regulations of the EU - Directives of the EU Council of November 28, 2006 N 2006/112/EC about joint system of the value added tax and the Directive of the EU Council of February 25, 1992 N 92/12/EC about the joint mode for excise goods and storage, movement and monitoring of such goods are considered.

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