Instituto de Estudios Políticos y Derecho Público "Dr. Humberto J. La Roche"
de la Facultad de Ciencias Jurídicas y Políticas de la Universidad del Zulia
Maracaibo, Venezuela
Esta publicación cientíca en formato digital es continuidad de la revista impresa
ISSN-Versión Impresa 0798-1406 / ISSN-Versión on line 2542-3185Depósito legal pp
197402ZU34
ppi 201502ZU4645
Vol.40 N° 72
Enero
Junio
2022
Recibido el 03/11/2021 Aceptado el 28/12/2021
ISSN 0798- 1406 ~ De pó si to le gal pp 198502ZU132
Cues tio nes Po lí ti cas
La re vis ta Cues tio nes Po lí ti cas, es una pu bli ca ción aus pi cia da por el Ins ti tu to
de Es tu dios Po lí ti cos y De re cho Pú bli co “Dr. Hum ber to J. La Ro che” (IEPDP) de la Fa-
cul tad de Cien cias Ju rí di cas y Po lí ti cas de la Uni ver si dad del Zu lia.
En tre sus ob je ti vos fi gu ran: con tri buir con el pro gre so cien tí fi co de las Cien cias
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ti ga do res; es ti mu lar la in ves ti ga ción en es tas áreas del sa ber; y pro pi ciar la pre sen ta-
ción, dis cu sión y con fron ta ción de las ideas y avan ces cien tí fi cos con com pro mi so so cial.
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avan ces o re sul ta dos de in ves ti ga ción en las áreas de Cien cia Po lí ti ca y De re cho Pú bli-
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Re vis ta Cues tio nes Po lí ti cas. Av. Gua ji ra. Uni ver si dad del Zu lia. Nú cleo Hu ma nís ti co. Fa-
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Vol. 40, Nº 72 (2022), 279-296
IEPDP-Facultad de Ciencias Jurídicas y Políticas - LUZ
Government Tax Policy in the Digital Economy
DOI: https://doi.org/10.46398/cuestpol.4072.15
Olha Pylypenko *
Halyna Matviienko **
Anatolii Putintsev ***
Ivan Vlasenko ****
Natalia Onyshchuk *****
Abstract
The article considers the peculiarities of the formation and
implementation of tax policy in the development of the digital
economy, reveals current problems, and substantiates the need
to change the tax system. The directions of compensation of the
reduction of income from the labor tax through automation and
introduction of articial intelligence in technological processes
are dened and the forms of taxation of digital commerce are
oered. The research methods were scientic abstraction, logic,
graphics, visual reection, analytics. It has been proven that the process
of digitalization of the economy in combination with the crisis caused by
COVID-19 causes many risks that must be considered when developing tax
policy. Emphasis is placed on the implementation of a tax policy based on
digital transformation, which stimulates innovation, ensures eciency, and
improves the quality of tax services. Increasing the use of digital technologies
has been shown to create challenges in many areas of public administration,
including taxation. It concludes that there is a need for broad international
cooperation to prevent tax evasion, ensure tax transparency and develop
new tax approaches and software.
Keywords: tax policy; digital economy; digitalization; taxes; digital
platforms.
* PhD, Associated Professor the Finance and Accounting Department V.I. Vernadsky Taurida National
University, Kyiv, Ukraine. ORCID ID: https://orcid.org/0000-0003-3997-9108
** PhD, Associated Professor the Finance and Accounting Department V.I. Vernadsky Taurida National
University, Kyiv, Ukraine. ORCID ID: https://orcid.org/0000-0002-5265-8379
*** PhD, Head of the Department of the Finance and Accounting V.I. Vernadsky Taurida National
University, Kyiv, Ukraine. ORCID ID: https://orcid.org/0000-0002-4397-0408
**** Doctor of Science (Economics), Professor of Department of Tourism, Hotel and Restaurant Business
Vinnytsia Institute of Trade and Economics of Kyiv National University of Trade and Economics
Vinnytsia, Ukraine. ORCID ID: https://orcid.org/0000-0002-3909-1179
***** PhD, Associated Professor of Department of Tourism, Hotel and Restaurant Business Vinnytsia Institute of
Trade and Economics of Kyiv National University of Trade and Economics Vinnytsia, Ukraine. ORCID ID:
https://orcid.org/0000-0002-1635-0801
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Olha Pylypenko, Halyna Matviienko, Anatolii Putintsev, Ivan Vlasenko y Natalia Onyshchuk
Government Tax Policy in the Digital Economy
Política Fiscal Estatal en la Economía Digital
Resumen
El artículo considera las peculiaridades de la formación e implementación
de la política tributaria en el desarrollo de la economía digital, revela los
problemas actuales y fundamenta la necesidad de cambiar el sistema
tributario. Se denen las direcciones de compensación de la reducción de
ingresos del impuesto al trabajo a través de la automatización e introducción
de inteligencia articial en los procesos tecnológicos y se ofrecen las formas
de tributación del comercio digital. Los métodos de investigación fueron:
abstracción cientíca, lógica, gráca, reexión visual, analítica. Se ha
comprobado que el proceso de digitalización de la economía en combinación
con la crisis provocada por el COVID-19 provoca muchos riesgos que deben
ser tomados en cuenta al momento de desarrollar la política tributaria.
Se pone énfasis en la implantación de una política tributaria basada en la
transformación digital, que estimule la innovación, asegure la eciencia
y mejore la calidad de los servicios tributarios. Se ha demostrado que
aumentar el uso de tecnologías digitales crea desafíos en muchas áreas de
la administración pública, incluida la scalidad. Se concluye que existe la
necesidad de una amplia cooperación internacional para prevenir la evasión
scal, garantizar la transparencia scal y desarrollar nuevos enfoques y
software scales.
Palabras clave: política scal; economía digital; digitalización;
impuestos; plataformas digitales.
Introduction
The crisis caused by the COVID-19 pandemic has led to the need to
accelerate the economy’s business and the changes in tax policies that
arise from its digitization. Modern crisis phenomena also lead to increased
pressure on public nances and public dissatisfaction with the existing
tax planning. Now the government and business have realized the need to
develop measures to adapt to new realities. The development of modern
technologies puts several complex issues for domestic tax policy.
This is regarding taxation of transnational business; compensation of
possible decrease of income from labor tax because of automation of a
signicant part of processes and introduction of articial intelligence i.e.,
developing general approaches to taxation in the digital economy. The
main issue of foreign tax policy is to change its priorities to address the
new challenges arising from the development of the digital economy. Due
to long-term economic uncertainty, many countries consider cautious
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measures to adapt their tax policies to new requirements (McKinsey and
Company, 2020).
1. Materials and methods
The aim of the article is to give an overview of the main features of the
digital economy and how its eect on development future tax policy.
The main research methods were scientic abstraction, logical
generalization of changes in tax policy in a digital economy, graphical
method for visual reection of trends in government consolidated gross
debt and its share in GDP, analytical method for determining the share of
total general government expenditure in GDP, visual reection the system
of government tax policy in modern conditions.
2. Results and discussion
One of the main modern tools for returning to sustainable economic
development is a well-balanced state tax policy, which in the context
of digital transformation should stimulate innovative activity, ensure
eciency, and improve the quality of services. Digitalization also gives
society more inclusiveness and improves the welfare of the population
when properly implemented. At the same time, the increasing use of digital
technologies poses challenges in many areas of public administration,
including taxation. Moreover, the reform of the international tax system
during the digital transformation is currently a priority of the international
economic community.
Digitalization and the crisis caused by COVID-19 have led to many
potential risks e.g., analysts predict a reduction in the number of jobs in
Europe to 26 percent of the total (Enache, 2021). Technological progress has
contributed to the expansion of the sharing economy and the gig economy,
which has signicantly changed the employment pattern and necessitated
changes to traditional tax systems designed primarily for permanent full-
time employees (Bulba et al., 2021).
In addition, the increase in online transactions and trade on the Internet
complicates accounting and collection of consumption taxes, particularly
the value-added tax. The main preconditions for revising tax policy in the
world are the crisis state of public nances in most countries. Due to the
COVID-19 pandemic, government spending has increased signicantly in
almost all countries. In 2020, compared to 2019, government spending
in the EU increased by 3% which amounted to on average 53.4% of GDP.
The most expenditures per year increased in Greece (by 6.6% and made
up 60.7% of GDP), Belgium (by 5.3%) and Croatia (by 6.1%) (see Figure 1).
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Government Tax Policy in the Digital Economy
Figure 1. Total general government expenditure (Percentage of
gross domestic product (GDP).
Source: (Eurostat, 2021с).
Due to rising government spending and declining tax revenues, public
debt and its share in GDP have grown signicantly in almost all countries.
In the EU, the average public debt-to-GDP ratio has risen from 66.3% to
90.7% over the last 20 years (see Figure 2).
Figure 2. Government consolidated gross debt Percentage of
gross domestic product (GDP).
Source: (Eurostat, 2021а).
Then considering the factors that cause a signicant change in tax
policies both at the global level and at the level of individual countries,
due consideration when implementing tax policy and mitigating negative
consequences through digital decisions. The main current trends in taxation
are:
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1. Businesses are becoming more mobile and global.
2. The age structure of the population is changing.
3. The importance of energy and environmental factors is growing.
4. The economy is becoming more virtual and less material.
5. Employment is becoming more exible.
6. Inequality of households’ income is growing (Enache, 2021: 3).
Prepotent to note that the world is experiencing a trend toward ageing
populations. This equates to fewer people being in the workforce who will
be subject to taxation than those who expect pension benets. In 1950 the
average age of the population in the world was 23.6 years (in Europe - 28.9
years) and compare to the average age is 30.9 in 2020 (42.5 - in Europe)
(United Nations, 2021). In the EU, the share of the population over 65 has
increased over the last 10 years by 3%, in particular: Finland (5.3%), Poland
(4.6%), the Czech Republic (4.6%) and Slovakia (4.2%) (Eurostat, 2021b).
The growth rate of the population aged 65+ per 100 population 15-64
has a threatening trend, by 2025 this indicator will increase almost twice,
up to 16%. In Europe, almost 30% of the population is now over 65 years of
age from the population aged 15-64, and by 2100 this gure will increase to
55%, especially signicant this gure is projected to be in countries such as:
Albania (104.1%), Italy (70.3%), Greece (67.8%). Already, these countries
face signicant increases in pension payments and labor market crises, and
their governments are forced to revise public pension systems and raise the
retirement age (United Nations, 2019).
Population ageing is a global trend, so it is important to change
educational policy, implement adult education and implement lifelong
learning programs e.g. in Austria, adult learning is encouraged by signicant
tax benets, tax credits, and reduced working hours, or by receiving 55% of
salary leave (CEDEFOP, 2021).
The ageing of the population is a global trend, so it is important to
change educational policy now, to introduce education for adults and to
implement lifelong learning programs e.g. in Austria, adult education is
stimulated by signicant tax benets, tax credits, reimbursement programs
and reduced working hours or obtaining study leave with the preservation
of 55% of salary (CEDEFOP, 2021).
The growth of income inequality also has a negative impact on the
economy. As such in the future capital and not labour, should become
the basis of taxation. Today, income inequality is growing every year: 1%
of the population receives 11.7% of total income (in Eastern Europe this
percentage is 13.4%) (WIID, 2021). Within the top percentile, the world’s
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Government Tax Policy in the Digital Economy
richest eight people have as much wealth as 3.6 billion people. This
uneven distribution of wealth raises concerns about income tax policies.
Most developed countries are already aware of this problem and are
now adopting legislation to reduce the offshoring of income and make it
impossible to avoid taxation, particularly by large corporations. It is
estimated that almost 8% or 7.6 trillion dollars of global financial wealth
are in offshore centers, and the fight against such practices has already
begun in most countries. However, it should be remembered that in a
globalized world, the unilateral introduction of capital taxes can lead to
capital flight from the country (McKinsey and Company, 2020).
Therefore, facilitating the control of financial flows through digitalization
may be a reason to rethink the policy on taxation of capital sources.
Most OECD countries collect most taxes from their labour and capital
taxes back in 2019. If we compare the average sources of tax revenues in
2019 and 1990, the biggest changes in the structure took place in personal
taxes (decrease from 29.9% to 24%), with a simultaneous increase in the
share of corporate taxes and social insurance (see Figure 3). Tax policy
differs significantly from OECD countries, and it would be fair to say that
there is no universal effective tax system in the world that would suit all.
The largest share of tax revenues in % terms regarding GDP is in
Denmark (46.6%), France (44.9%) and Sweden (42.8%) (Compare your
country, 2021).
Figure 3. OECD Tax Revenue Sources, 2019 and 1990.
Source: (Compare your country, 2021).
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It is also possible to note an increase in the share of taxes collected at
the national level in OECD federal countries i.e., from 50.6% in 1975 to
53.4% in 2019. This compared to unitary countries the opposite applies
i.e., a decrease in the share of local taxes and an increase shares of social
insurance funds. This indicates the formation of a universal tax policy,
which is no longer tied to the budget system of the country (OECD, 2020).
Another important challenge today is global climate change, which
demands carbon emissions reduction and incentives through tax policy
for environmental business. Increasing environmental taxes encourages
citizens and businesses to consider the environmental consequences of
their activities. As a result, less carbon goods and services will be consumed,
and businesses will move to low- or zero-carbon production.
Without an emissions tax, producers and consumers will not properly
consider the harmful eects of CO2 emissions. In addition, social and tax
pressures will push businesses to develop clean technologies and create
a negative attitude towards polluting enterprises. It is pertinent to note
that all Member States of the European Union has been in the Emissions
Trading System (EU ETS) since 2005.
During 1990, Finland became the rst country in the world to introduce
a carbon tax. But CO2 taxation is most eective if it is implemented at the
international level. The introduction of a tax only at the national level can
signicantly undermine the country’s economy. Today’s relatively low
prices and the level of taxation in the initial period are intended to give
companies time to reduce emissions to implement green technologies.
Carbon tax initiatives are now being implemented in 64 countries and
covering 21.5% of global emissions (OECD, 2019).
Such global trends have led to a fundamental review of tax policies,
particularly tax sources e.g., new taxes, such as automation taxes, replacing
workers, or global wealth taxes, can be introduced.
The tax on automation is becoming a popular subject of public
discussion. Many countries have stimulated innovation through tax credits,
accelerated automation, and preferential taxation. However, only now they
are beginning to realize the link between innovation, social protection,
plus jobs and automation. Nobel laureate in economics Robert Schiller
also noted that the automation tax may be a more politically acceptable
type of taxation for those who earn high incomes and are a natural part of
government policy to overcome inequality (KPMG, 2021a).
There are several options for introducing an automation tax and some
countries already use this tax. One option is to reduce tax benets for capital
investments or increase VAT on the purchase of robotic technologies. Also,
interestingly is the idea of tracking the number of jobs in the company
and then correlating them with the results of the activity. In Spain, this
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Olha Pylypenko, Halyna Matviienko, Anatolii Putintsev, Ivan Vlasenko y Natalia Onyshchuk
Government Tax Policy in the Digital Economy
resulted in the trade union oering companies to make social insurance
contributions on behalf of employees who are replaced by automation
(KPMG, 2021b).
For capital taxation, it is possible to introduce a national tax on global
wealth, which would be calculated considering all assets both inside and
outside the country. A successful example of tracking all foreign accounts of
U.S. residents is The Foreign Account Tax Compliance Act (FATCA), which
has been applied since July 1, 2014. It is also proposed in the United States
to increase funding for the US Internal Revenue Service and to conduct
mandatory inspections of a certain population of highly paid individuals
(PWC & WBG, 2020).
Also requires changes in the taxation policy under conditions of
digitalization and automation of labor, which is projected to reduce the
number of jobs and signicantly change the structure of the labor market.
Automation can reduce the demand for low- and middle-skilled workers
and at the same time increase the demand for highly skilled workers and
their wages. Therefore, it is already necessary to prepare society as a
psychologically and infrastructure for education throughout life and activity
in conditions of exible employment (KPMG, 2021a).
In the future, we can predict an increase in self-employment, the
conclusion of employment agreements for short periods, remote work of
employees. And if we do not change our approaches to determining income
and taxation now, most countries will be forced to raise taxes and increase
requirements for state aid recipients very soon.
In this regard, it is advisable to develop requirements for accounting
for income from non-standard employment of workers. This would apply
when paying their due taxes to guarantee them social protection and shift
the focus from labour taxation to taxation of capital sources (Karthik et al.,
2019).
Due to the COVID-19 pandemic, the volume of cross-border electronic
commerce associated with Internet trade has increased considerably. This
has made it much more dicult to identify and tax such transactions, and
as such in the traditional model of taxation they are very dicult to trace.
As national tax systems have hardly changed to meet the requirements of
the new digitalized world. A global approach and close cooperation between
countries is needed to develop common approaches to e-commerce taxation
(OECD, 2021).
The main problems of e-commerce taxation in Ukraine have similar
problems regarding taxation of this market segment in the USA and the EU:
1. Taxation of digital (intangible) products and online services in the
B2C and C2C segments. The existing VAT tax instruments of non-
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residents do not work for the digital economy e.g., payments for
Facebook and Google advertising services are made through card
accounts of individuals, i.e., such transactions are not subject to
control and as such the loss of VAT revenues to the budget is quite
signicant.
Electronic trading is dicult to control because the identity and
location of the buyer can be established only according to the bank card.
Additionally, if the payment is made through an electronic payment system,
such as Web-money this makes it even more dicult. As such, there is a
need for new tools that would allow tax authorities to identify and track
transactions on the Internet.
2. Imperfection of Ukrainian legislation on tax regulation of
e-commerce. Currently, the legislation does not clearly dene
electronic commerce, Internet trade and other terms, even though
they are widely used in ocial documents. At the legislative level,
there is no classication of digital products, i.e., it is not dened
whether to classify them as goods or services. To regulate the taxation
of digital goods, it is necessary to amend the relevant articles of the
Tax Code, which concern the objects of taxation in general and the
objects for VAT collection (Bodrov, 2018).
In addition, the main areas for increasing tax revenues may be improving
the administration of taxes, their diagnosis, the use of big data technology to
assess revenues. The use of the basics of behavioral economics in tax policy,
considering economic, social, and environmental impacts, also hides great
opportunities (Sentance Andrew, 2020).
Currently, the issue of developing methods of taxation of the digital
economy is acute at the global level, so it is important to cooperate between
countries to expand the tax base and develop international tax legislation.
For the rst time, tax challenges in the digital age have been identied as
one of the main ones in the OECD / G20 Project on “Base erosion and prot
shifting” (BEPS) in 2015.
In March 2018, the Taskforce on the digital economy (TFDE) identied
the tax challenges posed by digitalization and highlighted the need for
a global solution. BEPS introduced new rules that include minimum
country reporting standards, giving tax authorities a more comprehensive
view of enterprise operations at the global level. The BEPS also presents
recommendations for changes in the tax collection for consumption in
cross-border transactions.
The First and Second Pillars of BEPS will support global investment.
More notably, their proposals are aimed at increasing tax certainty and the
eciency of global capital allocation by increasing the importance of non-
tax factors (infrastructure, level of education, wage costs). Pillar One aims
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Olha Pylypenko, Halyna Matviienko, Anatolii Putintsev, Ivan Vlasenko y Natalia Onyshchuk
Government Tax Policy in the Digital Economy
to adapt the international tax system to the digital environment through
signicant changes to the rules that apply to the taxation of business prots.
The estimated eect of the implementation of BEPS is for: Pillar One -
0.2-0.5% of global tax revenues (or 5-12 billion dollars); Pillar Two 1.9-3.2%
(or $ 47-81 billion). Developed countries receive the most revenue from the
implementation of BEPS, as they have the major share of large corporations
that erode their income and remove it from taxation (OECD, 2021). The EU
Commission plans to introduce a digital fee no later than January 1, 2023
and has already developed a road map for the implementation of this fee.
Ukraine has joined the world trends and today is at the stage of
implementing the minimum standard of the BEPS plan. Several bills are
being drafted and are currently to be considered by parliament (Ministry of
Finance of Ukraine, 2017).
Using the capabilities of digital platforms for doing business has
contributed to the spread of the so-called sharing economy (Sharing
Economy), in which entities gain access to something in the markets on
a peer-to-peer (P2P) basis. One of the dening characteristics of the P2P
economy is that the interaction occurs among many indivisible, disparate
and independent economic units.
This contributes to the fact that activities through the platforms are
virtually unregulated by the state and are dicult to monitor by the tax
authorities. Such economic relations are taxed less than other types of
business due to the use of preferential rates or regimes, or simply because
entities do not show their prots (Tochylina, 2019).
At the same time, three-quarters of employees of digital platforms
are not registered as self-employed and do not pay taxes. In the online
sector, this gure is higher than in other areas of the economy. Most
employees who perform tasks on digital platforms qualify as “freelancers”
or “independent contractors” on digital platforms, which means that they
go beyond labour law. Almost half (45%) of them is convinced that they do
not need to ocially register their activities with government agencies (tax
and others) in order to work on Internet platforms. Only 14% are sure that
it is necessary to register, another 8% believe that it is most likely necessary
to register (Aleksynska et al., 2018).
Thus, within the framework of legal regulation, there should be
legalization of digital labor relations, the status of all participants of social
and labor relations should be equalized: both those who work on permanent
or temporary employment, and those who are involved in remote forms of
employment (freelance exchanges), crowdfunding platforms, professional
social networks, groups and pages in social networks, career sites or sections
of companies and organizations, outsourcing, etc.) (Kokhan, 2021).
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From January 1, 2019, the EU introduced changes to the VAT on digital
services. The OECD has also introduced new global tax reporting and
developed Model Reporting Rules. Under the new proposed procedure,
digital platforms (MRDP) should collect information on the income of
entities that oer housing, transport and personal services through online
platforms and transmit information to scal authorities (KPMG, 2021b).
In 2021, 36 countries have agreed to introduce a corporate tax rate of at
least 15% for international corporations from 2023; 136 countries and
jurisdictions, which account for more than 90% of world GDP, have agreed
to this reform. These innovations will allow you to pay fair shares of taxes,
regardless of the location of the business and the place of prot (PWC &
WBG, 2020).
The UN is also developing recommendations for global taxation. Thus,
the UN Tax Committee published a draft proposal for the taxation of
automated digital services, namely: online advertising services; internet
intermediary platform services; social media; digital content; cloud
computing; sale or other alienation of user data; standardized online
teaching services. UN continues to work to improve the provisions of the
digital tax treaty (KPMG, 2021b).
With the emergence of new technologies resulting from the development
of the digital economy, new tax problems arise, which should also be
addressed. One of the main modern challenges is the regulation of the
circulation and accounting of cryptocurrencies, taxation, and payments
in digital currencies (cryptocurrencies). In this regard, the OECD / G20
Inclusive System adopted in October 2020 the Report “Taxation of Virtual
Currencies: A Review of the Tax Regime and New Tax Policy Issues”.
Implementing OECD standards for the eective collection of VAT on online
sales of goods, services and digital goods and abandoning its plans for a
digital service tax (DST) based on turnover (OECD, 2021).
Ukraine is currently also focusing on cryptocurrency taxation issues.
According to experts, it is more appropriate to talk not about cryptocurrency,
but about cryptocurrency as a type of virtual asset that exists exclusively in
the system of digital data accounting in the form of a record with an identier
of information. Accordingly, a draft Law of Ukraine “On Virtual Assets” has
been developed, according to which virtual assets and their turnover are
not subject to VAT, taxation is carried out at 5% of the dierence between
the purchase and sale of a virtual asset.
Given the global trends in the transition from a raw materials economy to
high-tech production and the introduction of Industry 4.0, the study of the
digital economy in Ukraine is extremely relevant. The rapid development
of new technologies, global informatization intensies the process of
digitalization of Ukraine’s economy, considering the focus on international,
European and regional cooperation in order to integrate Ukraine into the
EU, access to European and world markets.
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Institutional and legal registration of the development of the digital
economy in Ukraine began in 2013, when the Cabinet of Ministers issued an
Order “On approval of the strategy for the development of the information
society in Ukraine.” In 2015, Ukraine joined the Declaration of the First
EU Eastern Partnership Ministerial Meeting on the Digital Economy, in
which the digital economy was recognized as an area of untapped potential
for both the EU and partner countries. The need to integrate the digital
markets of the Eastern Partnership countries into the single European
space is caused by the emergence of the initiative “Harmonization of Digital
Markets (HDM)”, in the implementation of which Ukraine is also involved.
It should also be noted that starting from 2015; a legal framework is
being formed that reects certain aspects of digitalization processes in
Ukraine. These are the Law of Ukraine “On Electronic Commerce”, the Law
of Ukraine “On Electronic Trust Services”, the Law “On Electronic Digital
Signature” and other bylaws, incl. about e-money, e-government, etc.
Recently, the number of services provided online in Ukraine has
increased signicantly, including in the eld of taxation. Thus, an electronic
oce of the taxpayer has been created, which allows the taxpayer to work
with the tax authorities in real-time. Such provision of administrative
services to taxpayers while removing them from direct contact with civil
servants is a means of preventing corruption in the tax authorities.
In Ukraine, the number of citizens who prefer the electronic submission
of declarations of property and income is gradually growing. Submission
of electronic reporting signicantly simplies the work and has many
benets for taxpayers, including savings in working time, nancial costs,
the eciency of processing and condentiality of information, notication
of existing budget and tax arrears (Bodrov, 2018:34).
Since 2015, electronic administration of value-added tax has been
introduced at all levels. Thus, it is now possible to automatically control the
value chain. By analyzing electronic VAT returns, it is possible to determine
the tax risks of taxpayers and prevent illegal deductions and refunds for this
tax. The introduction of remote digital control tools will improve the quality
of administration of taxes, fees, payments (Dmytryk, 2021).
To promote digitalization in Ukraine, a number of digital information
platforms aimed at providing public services online have been created and
are successfully operating. Platforms for the provision of state and municipal
services are operating successfully. More than 100 electronic services are
currently available for citizens and businesses on the Government portal. In
February 2020. The public digital application “Action” has appeared in the
public domain, which provides transparency, simplicity, the convenience of
providing public services to citizens and businesses online (Leheza et al.,
2021)
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The Action service provides an electronic display of the information
contained in digital documents during registration procedures, making
changes or obtaining information from the State Register of Individuals
(E-baby - state registration of childbirth, ID14 - obtaining a passport of a
citizen of Ukraine for the rst time). Also, among the services are those
related to taxation: digital registration number of the taxpayer, registration
of an individual entrepreneur, one-time assistance, income statements and
much more.
According to experts, the share of the digital economy in the GDP of the
world’s largest countries by 2030 will be 50-60%. In Ukraine, this gure
can reach 65% of GDP (subject to the implementation of the forced scenario
of the digital economy in Ukraine) (Cabinet of Ministers of Ukraine, 2021).
The need to form the digital economy in Ukraine is declared in the Order
of the Cabinet of Ministers “On approval of the Concept of development of
the digital economy and society of Ukraine for 2018-2020 and approval of
the action plan for its implementation” №67 of January 17, 2018. (Cabinet
of Ministers of Ukraine, 2018). Sustainable development, as well as a tool to
increase the eciency, productivity, and competitiveness of the economy.
In 2019, the Verkhovna Rada Committee on Digital Transformation was
established, as well as the Ministry of Digital Transformation of Ukraine.
The draft Law “On Amendments to the Tax Code of Ukraine to Stimulate
the Development of the Digital Economy in Ukraine” was also adopted as a
basis. Adoption of the bill will stimulate the development of the information
technology industry, increase its competitiveness, as well as increase the
revenue side of local budgets and social funds through a scal maneuver to
introduce a special tax regime for the payroll.
It is proposed to install for IT companies for the period from January 1,
2021, until December 31, 2030. features of taxation: tax burden on salaries
of employees at the level of 10% (5% of personal income tax (instead of
18%) + 5% of the single social contribution (instead of 22%) + exemption
from military duty); the income of the industrial entity is subject to the rate
of income tax with a coecient of 0.5, which is 9% (Verkhovna Rada of
Ukraine, 2021).
The digital economy also allows for improved administration and tax
collection. A single information system for transactions and invoices will
allow for electronic audits and automate the process of paying taxes. Close
cooperation between taxpayers and tax administrations in the real-time
system can provide signicant benets, including increased control over
taxpayers’ data and the prevention of fraud. Some countries already use
blockchain technology for tax administration and customs control.
Governments have already begun to introduce several new types of
taxes: taxes on technology, taxes on data, taxes on carbon emissions, and
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others. The introduction of new taxes requires tax authorities to create and
integrate databases and their analysis. Already, global cloud data is growing
by 15% every year. Virtually all economies reduce the use of cash, and non-
cash transactions are easy to administer and verify for tax purposes. In the
digital economy, new tools, and new ways of working need to be developed
(Trusova et al., 2021).
Support and development by the tax authorities of advanced analytics,
machine learning, and articial intelligence should be built into all
operations. Data is changing constantly and rapidly, so tax authorities must
constantly update their approaches, introduce new technologies.
Tax policy and appropriate responses of states should be aimed at
supporting the income of individuals and enterprises through measures such
as deferred payments and temporary reduction of rates. There is a need for
broad international cooperation to overcome the crisis, including through
rising debts from developing countries, and international cooperation to
prevent tax evasion and promote tax transparency. There is a clear role for
taxation in securing equity and promoting the macroeconomic incentives
needed to sustain growth.
The tax authority itself, which may become invisible in the future,
also needs to be changed. This is one possible scenario that could develop
from the support and day-to-day implementation of cashless payments,
electronic cash registers and digital invoicing tools, which will be linked
directly to accounting software and digital tax records.
In the future, companies will be able to replace accountants with
cloud accounting software with an automatic function of accrual and
payment of taxes. In the future, almost all business operations will involve
advanced analytics and articial intelligence. Moreover, because data
will change rapidly and constantly, tax authorities will need to have high-
quality hardware, software, and increase the number of programmers and
introduce new technologies faster than ever before.
The structure of employees in the tax authorities must also undergo
signicant changes, data analysis experts may occupy more than 50% of the
total number of employees, which already requires a review of personnel
policy. Usually, highly qualied ntech specialists are reluctant to go to the
public sector of the economy, which is now characterized by inexibility of
working hours and low wages.
Tax policy in the digital age must be based on transparency,
accountability, and the main factor in implementation is trust, which is
low in Eastern Europe. Business and public condence in the state can
be increased by developing online platforms for open state databases,
increasing their transparency, and guaranteeing the protection of personal
data. The formation of databases allows for segmentation of payers and the
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degree of risk; to detect fraud, increase condence in the country, increase
its investment attractiveness.
Conclusion
It is already clear that almost all countries need to change their tax
policies in line with the new requirements of the digital economy. The main
key adaptation measures are:
1. Increasing communication, support, and information activities.
During the period of remote work, the tax authorities should
spend more time on information work on innovations in tax policy,
consultations for dierent groups of taxpayers.
2. Development of measures to reduce shadow incomes and introduce
new approaches to determining the real amount of income. This
could be an increase in taxes on expenses, the introduction of new
environmental taxes or additional property taxes. At the same time,
providing a system that fairly and eciently redistributes income.
3. Digitization of tax authorities. Expansion of digital services by tax
authorities. Stimulating the digitalization of enterprises through
taxation (KPMG, 2021a: 2).
4. The new tax rules should be based on net taxation, avoid double
taxation and be understandable. It is necessary to adapt the
international income tax system to new business models by changing
the rules of prot distribution and relationships.
The digital transformation of tax authorities requires governments to
consider many factors: the maturity of the nancial and digital markets,
the security of transactions and the banking system, infrastructure,
security, and data protection. Moreover, especially a high level of trust and
willingness to pay taxes by businesses and individuals.
It is also possible to enter business contracts with online platforms, which
would integrate all transactions and payment data using special accounting
software with automatic generation of tax reporting and submission of
applications and payments. This approach automates the payment of taxes,
makes it impossible to evade them and provides an opportunity to conduct
all inspections online.
Thus, the realities of the digital economy determine the need for broad
international cooperation to prevent tax evasion, promote tax transparency
and develop new approaches and software. The digital economy oers new
opportunities, but at the same time causes some problems in the eld of
taxation.
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Esta revista fue editada en formato digital y publicada
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