Uman NUH | today: 08/14/2021

Impact of the taxation system on the financial performance of agricultural enterprises.

Author(s) Nepochatenko Olena O., Doctor of Economics, Professor, Rector of Uman National University of Horticulture, Head of Department, Uman National University of Horticulture
Bechko P.K., Candidate of Economics, , Uman National University of Horticulture, Ukraine
Barabash L.V., , , Uman National University of Horticulture, Ukraine
Category Economics
year 2019 issue Issue number 95. Part 2
pages 5-24 index UDK 336.228:631.16
DOI 10.31395/2415-8240-2019-95-2-5-24 (Link)
Abstract The issue of finding a rational taxation system for agricultural enterprises, as representatives of the main sector of employment in rural areas and the basis of the country's food safety, is constantly relevant in Ukraine. Both scientists and practitioners have been raising it especially acute and since 2014, when conventional taxation system for agricultural enterprises, represented by a lump-sum agricultural tax, was replaced by a single analog while raising tax rates. As a result, there is a clear downward net income trend among agricultural enterprises (from ₴101.912 billion in 2015 to ₴78.457 billion in 2017). Although in the period from 2012 to 2015 there was an increase in the mentioned indicator; the total deviation amounted to ₴75.184 billion. Another taxation system impact indicator on the profitability of agricultural enterprises is the abolition of the special VAT taxation regime for the mentioned business entities. Moreover, in this particular case, this regime was both an instrument of the state support for agricultural enterprises and a separate taxation mechanism. According to the mentioned mechanism, the VAT paid by the taxpayer as a tax liability for the products sold was not transferred to the budget but accumulated on special VAT accounts in banks, with the possibility to use it when purchasing inventory items. At that, the amount of VAT accumulated in special accounts amounted to ₴35.8 billion in 2016 that is ₴13.5 billion more than in 2012; the level of the state support decreased from ₴4.3 billion in 2012 to ₴2.2 billion in 2016. However, the abolition of the special VAT regime deprived farmers of the powerful state support. As a result, the level of their profitability decreased by 19.5 percentage points and amounted to 23.5% in 2017 against 43.0% in 2015. Due to the mentioned changes in the taxation system for agricultural enterprises, imports of food products to Ukraine have increased. Despite the good domestic potential for imports phase-out in almost all product groups, this fact led to an increase in the share of imported products and goods sold through the trading network, as well as to a reduction in the ratio of exports coverage of imports from 1.09 to 0.9 points. Based on the presented, it is proposed to review the taxation system for agricultural enterprises and consider it as a part of the state support program, as well as establish a gradation of tax rates depending on the region of operation of the enterprise, its type of activity and specialization.
Key words lump-sum tax, special VAT regime, state support, imports phase-out, agricultural enterprises, competitiveness of agricultural products.
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