| Abstract: |
This paper consider some aspects of how the value-added tax (VAT) has
functioned to date in Ukraine, focusing on linkages between tax design, tax
administration, and the structure of the economy. Two problems that have
dominated much discussion of the Ukrainian VAT in recent years ? arrears and
refunds ? are closely linked to more fundamental economic and political
conditions and hence cannot be resolved simply by redesigning either tax law
or tax administration, although various problems do of course exist with
respect to both law and administration, as developed in the paper. In
addition, the equity implications of a VAT in a country like Ukraine with a
large ?underground? economy are discussed, as is the recent adoption of a
?simplified? tax system that in some respects seems less likely to resolve the
underlying problems than to exacerbate them. In short, while Ukraine has,
under difficult circumstances, managed to implement what is in form a modern
VAT in a surprisingly short time, there is still much to be done before the
tax works as it should. |