Tax reforms during the war: analysis of social and economic consequences

Abstract

Introduction. The taxation system in any country plays an important role in regulating economic processes and ensuring the financial stability of the state. In periods of wars and global crises, such a system becomes especially important, as taxes are one of the main sources of revenue for the budget and can significantly affect the economic situation of the country. Implementing effective tax reforms in wartime is always a difficult task. Ukraine, which is actively fighting against Russian aggression, also faced the need to implement tax reforms to ensure financial stability and support society. In these conditions, guided by the needs of the country, the Ukrainian authorities made significant changes to the taxation system. Before the introduction of tax reforms, Ukraine faced a number of serious challenges. The invasion of Russia in 2022 was accompanied by irreparable damage, occupation of territories, destruction of infrastructure, mass migration of the population and great social and economic difficulties. The war not only led to a humanitarian crisis, but also seriously undermined the financial stability of the state. Before the start of the conflict, the Ukrainian economy was already under internal stress, and military actions limited the country's ability to function normally and sustain economic growth. The purpose of the paper is to study the effectiveness of tax reforms introduced during martial law, to analyze the social and economic consequences. Results. To ensure financial stability in wartime conditions and overcome economic difficulties, the authorities adopted a number of measures aimed at reducing the tax burden on business and entrepreneurs. One of the key reforms was the introduction of a simplified taxation system for enterprises with a small turnover, where the tax rate was only 2% of turnover. This decision made taxation more transparent and simple for entrepreneurs, and also allowed to reduce tax payments, even in the absence of actual profit. Tax incentives have been introduced for taxes such as flat tax, value added tax, income tax, customs duty and excise duty. The state also eased the procedure for taxing charitable assistance and support for the Armed Forces of Ukraine. Conclusion. All these tax decisions had both positive and negative economic and social consequences. It is important to emphasize that the effectiveness of wartime tax reforms is evaluated in the long term, and their impact can be difficult to estimate in advance. Therefore, it is necessary to constantly analyze, evaluate and adjust according to the current realities and conditions of today.