Abstract
Abstract. The paper aims at disclosing the nature of offshore tools used for the withdrawal of capital from Ukraine, as well as suggesting measures to be undertaken by Ukrainian authorities to improve the current situation. The authors apply comparative analysis to find the data discrepancy between State Statistics Service of Ukraine and Eurostat on export-import operations between Ukraine and the EU to determine the volumes of tax evasion and avoidance in Ukraine. The article states that dynamic internationalization of financial and economic operations of Ukrainian business entities in recent decades had negative effects on national welfare due to their maneuvering of capital between affiliated units via transfer pricing and intensifying their offshorization using transborder movement of commodities, services, and factors of production resulting in the reduction of budget tax revenues, increasing the scale of cross-border outflow of capital, strengthening the strategic control of foreign countries over the production facilities of Ukraine, as well as significantly undermining national tax security, macroeconomic and social balance. Thus, Ukrainian regulatory bodies must take measures aimed at deoffshorization of business activities, structural modernization of the national economy, dynamization of macroeconomic growth, regulation of inflation and increasing the volume of foreign direct investments in Ukraine. Keywords: multinational companies, offshore, offshore financial centers, offshorization, tax avoidance, tax evasion, tax haven, Ukraine. JEL Classification H26, H31, H32 Formulas: 0; fig.: 0; tabl.: 6; bibl.: 49.
Highlights
Ɍɨɤɚɪ ȼ. ȼ. ɞɨɤɬɨɪ ɟɤɨɧɨɦɿɱɧɢɯ ɧɚɭɤ, ɩɪɨɮɟɫɨɪ, ɩɪɨɜɿɞɧɢɣ ɫɩɟɰɿɚɥɿɫɬ ɜɿɞɞɿɥɭ ɝɪɚɧɬɨɜɢɯ ɩɪɨɽɤɬɿɜ, ɌȿɇȾȿɇɐȱȲ ɌȺ ȼɂɄɅɂɄɂ ɈɎɒɈɊɇɈȲ ȿɄɈɇɈɆȱɄɂ: ɌȿɆȺɌɂɑɇȿ ȾɈɋɅȱȾɀȿɇɇə ɍɄɊȺȲɇɂ
The main finding based on Mexico data is that reducing formal tax evasion by authorities capable to increase tax revenues by up to 68 percent from the starting point
The abovementioned methods form the solid basis for assessing different aspects of offshore economy, besides, we apply comparative analysis to find the data discrepancy between State Statistics Service of Ukraine and Eurostat on export-import operations between Ukraine and the EU to determine the volumes of tax evasion and avoidance in Ukraine
Summary
The biggest importers of Ukrainian goods using offshore jurisdictions and onshore companies in 2016 were Egypt ($2.1 billion), Turkey ($1.8 billion), China and Italy ($1.7 billion each), India ($1.6 billion), as well as Iran, Spain, the Netherlands, and the Russian Federation ($0.5—1 billion) [31] indicating the large-scale transfer of tax payments from Ukraine to offshore or «hybrid» tax jurisdictions, where the corporate income tax rates were 5 or more percent lower compared to Ukraine and did not exceed 13 percent.
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